The vertiginous curve of inflation in the United States is slowly flattening: the figures for December confirm a new slowdown, with, for the first time since May 2020, a slight fall in prices over one month, reinforcing the optimism of markets.
CPI inflation, a benchmark measure, fell to 6.5% from December 2021, compared with a 7.1% rise between November 2021 and November 2022, according to data released by the US Department of Labor. This development is in line with analysts’ expectations, according to the consensus published by MarketWatch.
And, if we compare prices not over a year, but over just one month, the trend is even down 0.1%, for the first time since the Covid-19 put the American economy under glass, almost three years ago.
“It’s another small step in the right direction,” Ryan Sweet, chief U.S. economist at Oxford Economics, told AFP. index. The Fed can’t rely too much on it as a real source of slowing inflation.”
According to the Ministry of Labor, a drop in prices at the pump is indeed “the main contributor to this monthly drop”, coming “more than to compensate” for the rise in housing and food prices in particular.
In detail, food prices increased by 0.3% and housing prices by 0.2% over one month, but fuel prices saw their prices contract by 4.5% over the same period.
Core inflation, i.e. excluding fuel and food prices, is on the other hand up 0.3% over one month, against 0.2% in November, again in accordance analysts’ expectations.
“Rising prices for essential expenses are making inflation hard to avoid and inflation remains a major issue for most consumers,” commented Neil Saunders, CEO of GlobalData.
The prices of used cars and air transport, which are particularly sensitive to energy prices, fell back. New cars are also down 0.1% over one month, a first since January 2021.
But “more worrying is the rise in service prices,” warns Mr. Sweet, “that is a source of inflation that has yet to peak. Looking to the coming year the real question is whether the drop in goods prices will offset the rise in services in the first half.
Costs and risks
However, the month of June now seems a long way off, when inflation reached its peak, its highest level since 1981, at 9.1% over one year.
Even if this downward trend is confirmed, the American Central Bank (Fed), which has made slowing inflation its priority, will not claim victory so quickly.
She wants to bring inflation back to around 2%, but favors another indicator, the PCE index.
The monetary institution should continue to voluntarily slow down economic activity, in the hope that the pressure on prices will ease in the long term. To the detriment of economic growth, and even at the risk of provoking a recession.
Its key rate seems destined to be further raised in the coming months, and to remain at a high level “for a while”, said Michelle Bowman, one of the institution’s governors, on Tuesday, acknowledging however that ” it is probable” that this weighs on employment.
However, it was optimistic about the possibility of managing to curb inflation without causing a recession. But the effects of Fed rate hikes take months to kick in.
Even though consumers have seen credit rates soar, consumption has so far resisted. Employment too, with an unemployment rate which fell further in December, to 3.5%.
However, the situation is likely to become more complicated in the coming weeks, analysts warn.
Layoffs are already increasing in the tech sector, at Amazon, Salesforce, Meta – Facebook’s parent company -, Twitter and DoorDash. And, in the financial sector, the banks Goldman Sachs and Morgan Stanley will also part with part of their workforce.
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This article has been published automatically. Sources: ats / awp / afp
