February 8, 2023

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US inflation hits lowest level in more than a year: 6.5%

Prices of goods and services in the U.S. fell by an average of one percent in December compared with November. But it still increased by 6.5 percent on annual basis

which reported US Department of Labor Thursday.

In November 2022, annual inflation in the US was still 7.1 percent. Inflation eased slightly in December due to fall in energy prices.

As a result, the price of petrol has fallen. But compared to November, electricity is as expensive as gas. Food prices also continued to rise, but at a much slower pace than the previous year.

Inflation in the US is key to the Fed’s interest rate policy

Inflation is very important to the US Federal Reserve’s interest rate policy. It aims for an average inflation rate of 2 percent. The Federal Reserve intends to raise its key interest rate further this year to further reduce inflation.

December’s inflation rate was in line with economists’ expectations, which averaged 6.5 percent annual inflation. On Wall Street reacted Stock markets opened modestly positive early on Thursday, but later fell again.

Financial markets are closely watching the central bank’s decisions in its fight against inflation. The key interest rate is currently at 4.25 percent, a 15-year low.

Federal Reserve officials have said interest rates will rise at least 5 percent before retreating and are assessing the impact of tighter policy.

However, most policymakers are calling for a smaller next step with a 0.25 percentage point increase.

read more: Top economist Nouriel Roubini warns that inflation will remain high for a long time: it’s due to war, robots and 3 other threats to the global economy.