Consumer prices rise 0.5% in December and push U.S. inflation rate to nearly 40-year high of 7%

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Numbers: Consumer prices rose 0.5% in December to push growth in the cost of living last year to a nearly 40-year high of 7%, indicating that high US inflation continues well into 2022. likely to live.

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Gains in the Consumer Price Index exceeded the 0.4% forecast of economists surveyed by the Wall Street Journal.

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A separate measure of consumer inflation that separates volatile food and energy prices rose 0.6% last month, government said on Wednesday, It boosted growth over the past 12 months from 4.9% to 5.5% – a 31-year high.

big picture: Inflation has been driven by strong customer demand and ongoing labor and supply constraints. While price pressures are likely to ease in 2022, economists predict inflation will probably exceed 3% by the end of the year.

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In contrast, inflation averaged 1.5% per year in the decade before the pandemic.

The Federal Reserve, which monitors the country’s inflation, has stepped up plans to remove stimulus for the economy. The central bank is also expected to raise short-term interest soon to tackle high inflation.

“The economy no longer needs or wants very liberal policies to deal with the pandemic and beyond,” Fed Chairman Jerome Powell said on Tuesday.

Market Feedback: Dow Jones Industrial Average DJIA,
+0.51%
and S&P 500 SPX,
+0.92%
Opened for a rally in Wednesday’s trading. 10 Year Bond Yield TMUBMUSD10Y,
1.727%
remained unchanged at 1.74%.

The Fed is trying to deal with price pressure, so investors don’t seem concerned about the latest reading of high inflation.

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