Rose US Consumer Prices Strong in December and the annual rise in inflation, the largest in about four years, may strengthen expectations that the Federal Reserve will begin raising interest rates in early March.
The U.S. Department of Labor said on Wednesday that the consumer price index rose 0.5% last month, after rising 0.8% in November.
In the 12 months to the end of December, CPI rose 7.0%. This is the largest year-on-year increase since June 1982 and a 6.8% increase in November.
Analysts conducted by Reuters expect the consumer price index to rise 0.4% in December and 7.0% year-on-year.
Inflation in the United States has been the fastest in 4 decades.
This increase explains the rapid change in the Federal Reserve’s approach to raising rates faster than expected.
Commodity prices in the United States rose 6.8% in November, the highest since 1982 a year earlier, and one of the highest increases in fuel, housing, food and used cars this month.
Job gains recorded in 2021 will help offset losses in 2020.
Rising inflation underscores why US officials are prepared to adopt a faster-than-expected monetary policy. The data released on Friday is evidence of a tight labor market, including wage increases and a decline in unemployment.
Central bank observers are expected to clarify next week whether the rate hike will come in March and when the central bank will begin to cut its $ 8.8 trillion balance sheet.
US President Joe Biden said there were signs of “improvement” in inflation figures released on Wednesday, even as prices rose sharply in some key sectors, albeit rising overall for four decades.
“Today’s report shows that inflation has fallen significantly over the past month, with lower gas and food prices.
“At the same time, this report confirms that we have more jobs, with continued price rises that put pressure on home budgets,” he added.
Mohannath Al-Ami, Managing Director, PIM Capital, said that inflation data indicates that the pace of inflation is accelerating towards controlling inflation.
In his interview with Al-Arabiya, he explained that anti-inflation measures will take several months and will stop when there are data indicating that inflation is falling to acceptable levels.
He explained that the year 2022 will reflect a return to normalcy of interest rates, especially in large industrialized countries.
With interest rates rising, stock prices will be challenged, especially in technology stocks, he said, adding that this year will see a decline.
He believes current inflation in the United States is at an all-time high, and the effects of supply chain problems, rising incomes from work at home, government financial aid, higher oil prices and easing volume, while pressure represent a small part of overall inflation.
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