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CPI Report Shows Gas Prices Fell Again In December, Helping Inflation Slow

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CPI Report Shows Gas Prices Fell Again In December, Helping Inflation Slow

(CTN News) – For the third month in a row, inflation eased as gasoline prices fell and grocery bills rose less.

The Labor Department’s consumer price index, which measures what people pay for goods and services, rose 6.5% from a year earlier, down from 7.1% in November and a 40-year high of 9.1% in June.

Economists had expected a slower annual rise last month.

Monthly CPI

Consumer prices fell 0.1% on a monthly basis, the first decline since May.

CPI Core: What is it?

Core prices, which exclude volatile food and energy items, increased 0.3% in November following a 0.2% increase in November. The annual increase was lowered from 6% to 5.7%.

In a note to clients, Morgan Stanley said the downshift in inflation pressures is entrenched.

Inflation rates by year

Despite supply chain bottlenecks and an easing pandemic, Americans have faced historic inflation since spring 2021. In order to beat back inflation, the Federal Reserve aggressively raised interest rates in a campaign that may tip the nation into recession.

Prices have been easing recently.

Why is inflation slowing down?

Used car and furniture have fallen or stabilized as supply chain troubles caused by COVID-19 have improved. While worker shortages persist, the cost of services has risen as more Americans return to traveling and other activities.

Powell says the Fed won’t be able to pause interest rate hikes until pay increases in the service industries slow down.

Central banks move cautiously. Fed rate hikes are expected to be scaled back to a quarter-point next month.

Over the past three months, inflation has eased since July. Prices are projected to slow dramatically in 2023. According to Barclays, annual inflation will reach 2.6% by the end of the year.

Index

On Thursday, major stock indexes edged higher. It rose less than 1%, or 5 points. The Dow Jones Industrial Average rose 136 points. The stock market has moved higher this week on expectations that CPI will increase.

Falling gas prices: why?

In December, gas prices declined for the fifth time in six months amid worries about a global recession. Gas prices fell 9.4%. According to AAA, regular unleaded gasoline averaged $3.27 a gallon Wednesday.

It’s helping,” Cheryl Stewart, of Perry Hall, Maryland, said. “It definitely frees up money.”

On her way to work, Stewart now stops at Dunkin Donuts or Starbucks for a coffee every morning.

Grocery prices remain high, she says. “I’m shocked to see a dozen eggs for over $4,” Stewart says.

Egg prices

Over the past year, grocery prices have risen 11.8% and 0.2% from November. Commodities like wheat and corn have fallen in recent months.

As the bird flu continues to thin chicken supplies, egg prices surged 11.1% in December. Cereal rose 1.1% and 13% from a year ago. Overall, rice rose 0.5% and 15.4%. Bread increased 15.9%.

Despite soaring food costs, some have declined. It was the latest in a long string of declines for bacon, chicken, fish, and seafood.

Other costs keep rising. Over the past year, rent increased 8.3%. Rents will fall later this year due to upcoming leases. Repair prices rose 1% and 13% annually. The price of a haircut increased by 0.3% and 6.3%.

Despite supply problems easing, clothing prices rose 0.5%. Furniture costs were flat.

Meanwhile, used car prices fell 2.5%, the sixth straight monthly decline and are now down 8.8% annually after increasing sharply earlier in the pandemic. Airfares declined by 3.1%.

Unemployment claims

Despite the Fed’s attempts to cool the economy, unemployment benefits applications fell to their lowest level in 15 weeks.

Labor Department data show 205,000 Americans applied for jobless aid in the week ending Jan. 7.

Since millions of jobs were wiped out by the pandemic in 2020, unemployment claims have been relatively low.

Interest rates were raised seven times last year by Fed policymakers to slow job growth and bring inflation down.

SEE ALSO:

Australian Dollar Holds Firm Despite Robust Data

Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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