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Central Bank Independence at the Riksbank in Stockholm, Sweden, on Tuesday, Jan. 10, 2023. The conference is being held in honor of Stefan Ingves, who recently ended a 17-year stint as head of Sweden's central bank. Photographer: Erik Flyg/Bloombergdata showed month-on-month deflation with prices falling 0.1%, primarily due to lower energy prices. However, despite the monthly decline, inflation is still running at 6.5% year-on-year compared to the U.S. Federal Reserve’s 2% goal.
In addition, services inflation, which the Fed is watching closely, rose 0.5% for the month, driven by mainly by rising housing costs. Although inflation has eased since the summer,December Inflation Data December’s inflation data was broadly encouraging. Energy prices, falling 4.5% caused prices to decline overall for the month, but stripping out food and energy, prices rose 0.3% month-on-month, which is still a little higher than the Fed wants. Inflation has clearly trended lower since the summer, even if it’s still well above the Fed’s 2% objective.
The cost of many goods fell in December. Categories seeing monthly price declines included many commodities, cars and certain categories of household goods and clothing. Food prices, which were rising rapidly are still increasing, but at a slower 0.3% monthly rate as the cost of various foods such as various meats and produce fell in price month-on-month for December, notwithstanding a spike in the price of eggs.The main issue the Fed will have with the CPI report is rising services costs.