December’s US inflation rate rose to 2.9%, driven largely by a 40%+ surge in energy prices and a staggering 36%+ increase in egg prices due to avian flu. However, core inflation remained lower than anticipated at 3.2%, easing concerns of a renewed inflation wave. This relatively positive data, contrasting with strong job growth, created uncertainty regarding future Federal Reserve interest rate cuts. Market reactions were initially positive, but anxieties persist about potential inflationary pressures from upcoming policy changes.
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The personal consumption expenditures (PCE) price index, a key indicator of US inflation, rose by 2.1% in September, down from 2.2% in August. This is the lowest level since 2021 and is seen as a success for the Federal Reserve, which was aiming to reduce inflation to 2%. In a move from its previous stance that price growth would be “transitory”, the Federal Reserve raised interest rates to a 20-year high before beginning to cut them again in September. Despite this positive development, the high cost of living continues to be a hot topic ahead of the US presidential election. Furthermore, almost half of US citizens surveyed in a recent poll wrongly believe that the country is in recession.
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John Q. Hosedrinker