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December year-on-year inflation in the United States stood at 6.5%, six tenths below that of November (7.1% annual) and is the lowest figure since October 2021. The market is now awaiting signs from the Reserve Federal (FED), hoping that the increase in interest rates will not be drastic.
The Fed’s plan is working and the global markets appreciate it. The first inflation data that is known this year brought optimism to investors and establishes a positive outlook for companies around the world.
And it is that from the beginning of this week, all eyes were on the United States, attentive to the data of its Consumer Price Index (CPI) and hoping that, once again, inflation would drop as it has been doing since July of 2022. A month earlier, in June, it stood at 9.1%, the highest data in the last four decades.
Since July, the year-on-year data for US inflation has been located as follows: 8.5% in July; 8.3% in August; 8.2% in September, 7.7% in October; 7.1% in November, and the most recent December, with 6.5% annual.
From that moment on, the US Central Bank tightened its monetary policies and the increase in interest rates was applied forcefully with the aim of discouraging consumption and cooling down an economy that was already suffering the consequences of the pandemic and the war in Ukraine.
The FED has made it clear that the rise in interest rates “will not stop for the moment”, however, said increase is expected to be less than the previous ones, when the financial institution has presented four consecutive increases of 0. 75 points.
The data published this Thursday, January 12, by the Bureau of Labor Statistics also made US President Joe Biden happy, who has been harshly criticized for the high inflation levels during his Administration.
“For the sixth consecutive month, annual inflation falls. It may be going up in economies around the world, but here it’s going down, and the prices of gasoline, food and other products are keeping up. All of this is a respite for families and proof that my plan works,” the US president wrote on his Twitter account.
For the sixth month in a row, yearly inflation is down.
It might be rising in economies around the world, but it’s coming down here. And gas prices, food, and more are following.
That adds up to a break for families and proof that my plan is working.
—President Biden (@POTUS) January 12, 2023
In the corridors of the world’s main stock markets, it was already rumored that inflation would drop this month. Investors and market analysts had predicted 6.5% for the CPI and their forecast came true. Since February 2022 the market was not correct in the projections.
The Asian stock markets closed on Wednesday optimistic to the inflation data that was speculated, the European ones closed with their three main indicators registering gains and the opening of Wall Street also opened with green numbers.
On the other hand, core inflation, which excludes energy and food prices, stood at 5.7% in its interannual rate, after rising 0.3 pp this month.
A piece of data that surprised in general was the gasoline index, which was the one that contributed the most to the monthly decrease in prices, since it fell 9.4% monthly, while the food index increased 0.3% during the last month of the year.
With Reuters and AP
