The US witnessed a surge in its inflation rate, reaching 3.4 percent in the month of December. The Consumer Price Index (CPI) showed a notable acceleration, registering an annual rate of 3.4 percent, while core inflation, excluding the impact of volatile food and energy prices, experienced a slowdown, settling at a 3.9 percent rate.
The Federal Reserve is gearing up to address this economic shift and is anticipated to initiate cuts to its target rate during its March meeting, with a substantial 67.1 percent probability. The Fed has outlined plans for three quarter-point cuts throughout the year, with the objective of curbing long-term inflation to hover around its target of approximately 2 percent. This strategic move comes after a series of rate hikes totaling 5.25 percentage points from March 2022 through July 2023.
Analyzing specific sectors, the energy index reported a decrease of 2 percent on an annual basis in December, while the food index witnessed a 2.7 percent increase. The housing sector, specifically shelter costs, experienced a slowdown, settling at 6.2 percent.
Breaking down the monthly figures, the CPI rose by 0.3 percent, paralleled by a 0.3 percent increase in the core Consumer Price Index. Additionally, services, excluding energy-related services, showed a significant uptick, rising by 5.3 percent over the year through December.
As the nation navigates these economic dynamics, all eyes are on the Federal Reserve's upcoming decisions, which are expected to shape the course of monetary policy in response to the evolving inflation landscape.
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