For December 2022, the Consumer Price Index reported a drop of 0.1%, highlighting the largest inflationary drop in close to three years, according to a report using data issued by the Bureau of Labor Statistics.
This recent month-to-month drop of 0.1% seemed to fall in line with the forecasts from analysts, while core inflation, which makes sure to exclude the extremely volatile categories of energy and food, went up by 0.3%, also go along with predictions. Prices for food saw a jump of 0.3% and costs for shelter jumped by a significant 0.8% despite the fact that the prices for energy seemed to drop by 4.5%. The overall month-to-month drop was the largest of its kind recorded since all the way back in April 2020, when spending went into freefall for both consumers and businesses because of draconian government lockdown mandates.
Year-over-year levels of inflation were recorded at 6.5% back in December 2022, highlighting a drop from 7.1% recorded in the previous month. The drop in prices for energy that has sparked much of the lower headline inflation seems to follow along as gas prices climb to their highest levels recorded last year.
Greg McBride, a Chief Financial Analyst for Bankrate, stated in recently released comments that “the tide has turned, and improvement is now the prevailing trend,” which seems to imply that policymakers from the federal reserve could tone down their aggressive actions to increase target federal funds rates because of the new inflation report. “But that may just mean more small rate hikes rather than fewer large rate hikes,” he stated. “The end point is still to be determined.”
Officials from the Federal Reserve pushed rates up by close to three-quarters of a percentage point on a total of four separate instances this past year prior to implementing an increase of roughly a half-percent, sparking much higher interest rates all over the nation. McBride highlighted that the overall prices for goods have been dropping on average even as the cost of services seems to be on the rise.
“Moderating inflation is most apparent in the prices for goods such as used cars and trucks that have declined for six straight months. But it is in services where labor shortages are most pronounced, making services inflation tougher to corral,” he concluded. “Despite the headline and core results meeting expectations, the broad-based improvement that needs to be seen to get inflation truly under control is still lacking. In addition to shelter, plenty of other necessities increased at an outsized pace last month: food, apparel, vehicle insurance, and household furnishings and operations.”
