Inflation likely slowed to six.5% last month

Inflation is anticipated to have slowed again in the ultimate month of 2022, a welcome downtrend in consumer prices after the Federal Reserve raised rates of interest to the very best level in 15 years.

The Bureau of Labor Statistics’ December Consumer Price Index (CPI) is scheduled for release at 8:30 a.m. ET on Thursday.

Economists expect headline CPI rose 6.5% over the prior yr in December, consensus estimates from Bloomberg show, a deceleration from the 7.1% increase seen in November. On a month-over-month basis, CPI likely fell 0.1%, in response to the projections.

Core CPI, which removes the volatile food and energy components of the report and is closely tracked by the Fed, can be expected to have risen at a slower pace last month. Forecasts call for an annual reading of 5.7% last month after a 6% rise in November. Over the prior month, core CPI is anticipated to rise 0.3% after a 0.2% jump in November.

Policymakers monitor “core” inflation more closely resulting from its nuanced have a look at key inputs like housing, while the headline CPI figure has moved largely in tandem with volatile energy prices last yr.

“Deconstructing inflation, core goods prices have stabilized, and shelter inflation is more likely to turn in the following few months based on alternative indices,” Ronald Temple, chief market strategist at Lazard said in a note. “Services excluding shelter remain concerning as wages are a critical driver of price pressures.”

“Until we see sustained easing of labor market tightness, service inflation will remain a risk,” he said.

Thursday morning’s report is more likely to dictate bets on whether the Federal Reserve raises rates of interest by 0.25% or 0.50% at first of next month.

The Federal Open Market Committee (FOMC), the group of Fed officials that vote on policy changes, is set to convene Jan. 31-Feb.a 1 and deliver the primary rate increase of 2023 and eighth of the present mountain climbing cycle.

Last month, officials raised rates of interest by 50 basis points, bringing total increases to its benchmark policy rate to 4.25% in 2022.

(This post will probably be updated at 8:30 a.m. ET.)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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