Is It Victory Already Over Inflation ?

When should the Fed declare victory over inflation?

Inflationary pressure is been felt all over the world with bills skyrocketed up. In fact, no country is left out except Switzerland which is praying for inflation indirectly as they suffer from Deflation.

Several global factors has made it a global problem. The factors might include the Covid-19 Pandemic and Russia-Ukraine war.

However, Bureau of Labor Statistics reported Thursday in its Consumer Price Index that Consumer prices decreased by 0.1% in December

The closely watched inflation indicator also revealed that prices continued to decline year over year in December, slowing to 6.5% from 7.1% in November.

Edition.cnn.com reported, “It all adds up to a real break for consumers, real breathing room for families and more proof that my economic plan is working,” said President Joe Biden on Thursday. “We have more work to do, but we’re on the right track.”

Brian Deese, Biden’s top economic adviser and head of the National Economic Council, told CNN’s Kate Bolduan that the latest report and the downward trajectory in prices over the past several months is “encouraging,” especially considering the latest jobs report, which showed the economy added 223,000 jobs in December and unemployment fell to 3.5%.

Even with the reduction, the headline CPI increased 6.5% from a year earlier, underscoring the ongoing strain that rising living costs have had on American households.
The core CPI, which excludes volatile food and energy costs, increased 0.3%, thus above predictions.

However, claiming the victory now appears unlikely given how aggressive central bankers have been since beginning rate increases in March 2022 and how careful they have been about evaluating isolated data signs as part of a larger trend.

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Fuel oil fell 16.6% for the month, helping the energy index to fall by a total of 4.5%.

In December, food costs rose by 0.3%, and the cost of housing also grew sharply, by 0.8% for the month and 7.5% from a year earlier. Approximately one-third of the CPI index is made up by housing.

Americans had a shaky ride in 2022. During the first half of the year, prices surged, reaching an all-time high of 9.1% in June.

Apart from more agreeable pump prices, inflation has eased across a wide range of industries.

Between November and December, used vehicle and truck costs, airline tickets, and hospital services all decreased while the rate of price rises in other significant categories slowed.

The price of eggs increased by 59.9% in December compared to the previous year, the largest yearly increase since 1973. The rise in egg costs is partly attributable to an avian flu outbreak.