The vertiginous curve of inflation in the United States is slowly flattening: the figures for December confirm a new slowdown with, for the first time since May 2020, a slight fall in prices over one month, reinforcing market optimism . CPI inflation, a benchmark measure, fell to 6.5% from December 2021, compared to a 7.1% rise between November 2021 and November 2022, according to data released by the US Department of Labor. This development is in line with analysts’ expectations, according to the consensus published by MarketWatch. And, if we compare prices not over a year, but over just one month, the trend is even down 0.1%, for the first time since the Covid-19 put the American economy under glass, almost three years ago.
“It’s another small step in the right direction, commented Ryan Sweet, chief economist for the United States at Oxford Economics, but the decline is attributable above all to the most volatile components of the index. The Fed can’t rely too much on it as a real source of inflation deceleration. »
A few minutes following the publication of these figures, the flagship index of the Paris Stock Exchange, the CAC 40, exceeded 7,000 points in session yesterday, a first since February 17, 2022. But on Wall Street, the Dow Jones was , he was down 0.42% yesterday followingnoon. According to the Ministry of Labour, a drop in prices at the pump is indeed “the main contributor to this monthly drop”, coming “more than to compensate” for the rise in housing and food prices in particular.
In detail, food prices increased by 0.3% and housing prices by 0.2% over one month, but fuel prices saw their prices contract by 4.5% over the same period.
Core inflation, i.e. excluding fuel and food prices, was up 0.3% over one month, once morest 0.2% in November, once more in line with analysts’ expectations. “Rising prices for essential expenses are making inflation difficult to avoid and inflation remains a major issue for most consumers,” said Neil Saunders, CEO of GlobalData. The prices of used cars and air transport, which are particularly sensitive to energy prices, fell back. New cars are also down 0.1% over one month, a first since January 2021.
But “a more worrying thing is the rise in the prices of services, warns Mr. Sweet, it is a source of inflation which has not yet peaked.” For the coming year, the real question is whether the drop in goods prices will offset the rise in services over the first half of the year”.
Costs and risks
It seems far away, however, now, the month of June, when inflation reached its peak, its highest level since 1981, at 9.1% over one year. Even if this downward trend is confirmed, the US Federal Reserve (Fed), which has made slowing inflation its priority, will not claim victory so quickly. She wants to bring inflation back to around 2%, but favors another indicator, the PCE index. The monetary institution should continue to voluntarily slow down economic activity, in the hope that the pressure on prices will ease in the long term. At the expense of economic growth and even at the risk of causing a recession. Its key rate seems destined to be raised further in the coming months and to remain at a high level “for a while”, Michelle Bowman, one of the institution’s governors, declared on Tuesday, acknowledging however that “there is probable” that this weighs on employment. However, it was optimistic regarding the possibility of managing to curb inflation without causing a recession. But the effects of Fed rate hikes take months to kick in.
Even though consumers have seen credit rates soar, consumption has so far resisted. Employment too, with an unemployment rate which fell further in December to 3.5%. However, the situation is likely to become more complicated in the coming weeks, analysts warn. Layoffs are already on the rise in the tech sector, at Amazon, Salesforce, Meta – parent company of Facebook – Twitter and DoorDash. And, in the financial sector, the banks Goldman Sachs and Morgan Stanley will also part with part of their workforce.
Julie CHABANAS/AFP
The vertiginous curve of inflation in the United States is slowly flattening: the figures for December confirm a new slowdown with, for the first time since May 2020, a slight fall in prices over one month, reinforcing market optimism . CPI inflation, the benchmark measure, fell to 6.5% from December 2021, once morest…
