Inflation softens at the end of 2022 and clears path for slower Fed rate hikes
The numbers: The U.S. cost of living fell 0.1% in December and posted the first decline since the onset of the pandemic in 2020, pointing to a further slowdown inflation after it hit a 40-year peak last summer.
The annual rate of inflation fell for the sixth month in a row to 6.5% from 7.1% . That’s the lowest level in more than a year and down from a 40-year peak of 9.1% last summer. The advance in the core rate over the past 12 months dropped to 5.7% from 6% to mark the lowest level in a year.Key details: Gasoline prices fell again at year end to hold down the headline CPI. The cost of gas has tumbled since last summer and given households some major price relief.
Another major worry of the Fed is the cost of shelter, which has risen at the fastest pace since 1982. It’s the single biggest category of the CPI.As a result, the yearly increase in the cost of shelter rose to a new 40-year high of 7.5% from 7.1%.
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