(RightIsRight.co) – Inflation in the U.S. continues its upward trajectory, exceeding expectations in December and shaking the pillars of America’s economy.
The situation only worsens with time as the current mark is 33 months of annual price increases, surpassing the Federal Reserve’s two percent target.
The consumer-price index (CPI), a comprehensive measure of what consumers pay for goods and services, climbed 3.4% from the previous year, outpacing economists’ predictions of a 3.2% rise. This increase follows a 3.1% gain in November.
The month-over-month CPI data reveals a similar trend, with a 0.3% increase in December, accelerating from November’s 0.2% rise and surpassing the anticipated 0.2%. This persistent inflationary pressure, peaking at 9.2% in June 2022, has somewhat eased due to aggressive interest rate hikes by the Federal Reserve and a curtailment in government spending amid concerns over substantial budget deficits.
A significant contributor to December’s inflation was the rise in housing costs, accounting for over half of the monthly increase, as noted by the Department of Labor. Additionally, the energy index, including electricity and gasoline prices, saw a 0.4% rise. Food prices also continued their upward trend, with grocery and dining out costs increasing by 0.1% and 0.3%, respectively.
Core inflation, which strips out volatile food and energy prices, rose 0.3% in December, higher than the forecasted 0.2%. Year-over-year, core prices have escalated by 3.9%, slightly down from November’s 4% but above the anticipated 3.8%.
These inflationary trends have influenced market expectations, with some predicting a potential rate cut by the Federal Reserve as early as March. However, the persistent rise in inflation could compel the Fed to delay any rate cuts.
This situation gains additional scrutiny considering the upcoming election year, with the Fed’s decision-making under the spotlight. Former President Trump, in an interview, speculated that the Fed might cut rates to aid Joe Biden’s re-election bid, emphasizing the political ramifications of such monetary policy decisions amidst ongoing inflation challenges.
