The inflation data published today (Tuesday) in the USA indicate that the rate of inflation continues to moderate. The price increases in November amounted to 7.1% – below the expectation of an increase of 7.3% and compared to 7.7% in the previous month. The consumer price index in the USA increased by 0.1 % only – below forecasts for an increase of 0.3% and compared to an increase of 0.4% last month.
Core inflation (inflation excluding energy and food) rose 0.2% in November – also below expectations for a 0.3% increase. At an annual rate, this is a rate of price increases of 6%, while market expectations were for a 6.1% increase.
This is a particularly positive figure for the American economy and the entire world, when the Fed’s policy may be reflected in slowing down the rate of interest rate increases. The market predicts that tomorrow the Fed will raise the interest rate by only 0.5%, and this after increases of 0.75% in each of the last two meetings, which were the highest rate increases since the days of Paul Volcker as governor.
Futures on Wall Street’s leading indices are now trading up as much as 3%, with the fear index (VIX) down 6%.