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The US dollar currency reacted by selling off after the release of the US CPI report for the month of December earlier today, while US equity market were largely flatlining.
Breaking down the number, the Consumer Price Index in the United States decreased 0.1% month-over-month in December of 2022, the first decline since May of 2020 and beating market forecasts of a flat reading.
Gasoline costs dropped 9.4%, more than offsetting a 0.8% increase in shelter prices. While food prices were up 0.3%, below 0.5% in the previous month.
Other increases were also seen for household furnishings and operations, motor vehicle insurance, recreation, and apparel. In contrast, the indexes for used cars and trucks, and airline fares were among those that decreased over the month.
As always, all eyes were on the annual inflation rate as most traders try to gauge this metric as comparison basis to how CPI was performing the same time last year.
The annual inflation rate in the US slowed for a sixth straight month to 6.5% in December of 2022, the lowest since October of 2021, in line with market forecasts. It follows a 7.1% reading in November.
Energy cost increased 7.3%, well below 13.1% in November, as gasoline cost dropped 1.5%, following a 10.1% surge in November. Also, fuel oil cost slowed (41.5% vs 65.7%) while electricity prices rose slightly faster (14.3% vs 13.7%).
A slowdown was also seen in food prices (10.4% vs 10.6%) while cost of used cars and trucks continued to decline (-8.8% vs -3.3%). On the other hand, the cost of shelter increased faster (7.5% vs 7.1%).
Compared to the previous month, the CPI edged 0.1% lower, the first decline since May of 2020, and beating forecasts of a flat reading. Inflation seems to have peaked at 9.1% in June of 2022, but it remains more than three times above the Fed’s 2% target.
The number of Americans filing new claims for unemployment benefits fell by 1,000 to 205,000 on the week ending January 7th, well below expectations of 215,000.
It was the lowest value in over three months, adding to recent evidence of a tight labour market despite the Federal Reserve’s aggressive tightening path last year. The 4-week moving average fell by 1,750 to 212,500.
