More evidence that price pressures have peaked
Author of the article:
Bloomberg News
Reade Pickert
Published Jan 12, 2023 • 1 minute read
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The U.S. consumer price index was up 6.5 per cent from a year earlier. Photo by Spencer Platt/Getty Images U.S. inflation continued to slow in December, adding to evidence price pressures have peaked and offering the Federal Reserve room to slow the pace of interest-rate hikes next month.
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Excluding food and energy, the consumer price index rose 0.3 per cent last month and was up 5.7 per cent from a year earlier, according to a Labor Department report Thursday. Economists see the gauge — known as the core CPI — as a better indicator of underlying inflation than the headline measure.
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The overall CPI fell 0.1 per cent from the prior month, with cheaper energy costs fuelling the first decline in 2 1/2 years. The measure was up 6.5 per cent from a year earlier.
U.S. stock futures dropped before paring losses and Treasuries fluctuated. All of the figures matched the median estimates in a Bloomberg survey of economists.
The data, when paired with prior months’ lower-than-expected readings, point to more consistent signs that inflation is easing and may pave the way for the Fed to downshift to a quarter-point hike at their next meeting ending Feb. 1. That said, the central bank’s work is far from over.
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Recommended from Editorial Fed minutes show inflation resolve, concern on market views What to expect from inflation, interest rates and the housing market in 2023 Resilient consumer demand, particularly for services, paired with a tight labour market threaten to keep upward pressure on prices.
The Fed is expected to raise interest rates further before pausing to assess how the most aggressive tightening cycle in decades is impacting the economy. Policymakers have emphasized the need to hold rates at an elevated level for quite some time and cautioned against underestimating their will to do so. Investors are still betting the central bank will cut rates by year end, despite officials saying otherwise.
With assistance from Matthew Boesler, Chris Middleton and Sydney Maki
Bloomberg.com