The CPI statistics for December will be released as the Fed prepares to tighten policy in the face of rising prices.
In December, the US consumer price index is estimated to have climbed at its quickest rate in over four decades, as the Federal Reserve is concerned about the possibility of rising inflation and its implications for the recovery.
According to a consensus projection collected by Bloomberg, the consumer price index (CPI) climbed at a 7% annual rate last month, up from 6.8% in November.
However, price increases from month to month are predicted to have slowed to 0.4 per cent in November and December, down from 0.8 per cent the previous month. On Wednesday, at 8.30 a.m. Eastern, the data will be made public.
At The Core
Inflation “at the core,” which excludes volatile commodities like food and energy, is projected to have accelerated considerably more than previously estimated. Economists predict that core CPI will have risen to 5.4 per cent, up from 4.9 per cent in the previous year. This equates to a 0.5 per cent monthly rise.
The fresh figures came just one day after US Federal Reserve Chair Jay Powell warned that high inflation posed a “serious threat” to the labour market recovery and reaffirmed the central bank’s plans to gradually decrease its monetary policy stimulus.
Senior officials have begun to plan how they will raise interest rates from near-zero levels after they achieve their dual objectives of maximum employment and 2% inflation over time.
The statistics for December is expected to show more indicators that inflation is increasing across the economy and is becoming more entrenched.
The December inflation number is expected to put pressure on the POTUS, Joe Biden administration’s economic stewardship as the midterm elections in 2022 approach. While the US president presided over a robust economy that added over 6 million jobs last year and brought the unemployment rate down to 3.9 per cent, the perception of a healthy recovery has been harmed by price spikes and supply chain disruptions.
The White House has been attempting to ease bottlenecks at the important crackdown on anti-competitive behaviour, ports in particular areas, such as the meat industry, and encourage more oil production worldwide to lower gasoline prices. Other inflation-fighting measures, such as reducing tariffs on Chinese imports, have been avoided.