January 27, 2023


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US inflation continues to decline: price growth of 7.1% in November

US inflation continues to decline: price growth of 7.1% in November

US inflation ended at 7.1 percent year-on-year in November, down from 7.7 percent in October. Core inflation, which excludes US food and energy prices, closed at a steady 6 per cent last month, down from the annual rate of 6.3 per cent in October.

The November numbers are thus at their lowest since December of last year, measured on a year-over-year basis.

Up front, price growth was expected to reach 7.3 percent, according to estimates obtained by Bloomberg.

On a monthly basis, headline inflation rose 0.1 percent from October to November, while core inflation rose 0.2 percent.

In a sense, it’s a small victory for the Fed, as inflation numbers are moving in the right direction – perhaps faster than the market expected, says Formue’s chief strategist Christian Lee.

After the figures were released, all three major Wall Street indices rose significantly in pre-trading, while the interest rate on 10-year US government bonds fell to less than 3.5 percent. Wall Street also opened significantly higher.

The price is in the interest rate multiplier increase

Sharply rising prices have hit households, businesses, and financial markets over the past several months. In the United States, food prices have skyrocketed, as have electricity, gasoline, diesel, and transportation prices.

The US central bank (Fed) has reached into its toolbox and pulled out the interest rate weapon. With a series of three rate hikes, the Fed has stagnated inflation, and many economists believe the peak may have been reached in June.

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US inflation has now fallen from a peak of 9.1 per cent in June to 7.1 per cent. Lee sees many reasons why inflation should fall further, but he thinks it may be difficult to bring price growth down to the 2 percent target.

Christian Lee, Chief Strategist at Formue.

Christian Lee, Chief Strategist at Formue. (Photo: Oyvind Elfsborg)

The reason for this is that there is still a shortage of labor, and you are getting a number of signals that wage pressure is continuing. That means it may be difficult to bring inflation down toward the 2 percent target without having a somewhat significant impact on the labor market, Lee says.

Sharp increases in interest rates have led to turmoil in the stock markets this year. A lie warns that you are likely to be capricious in the coming months.

– We can have a pleasant period as long as inflation is falling at the same time that labor market capacity and consumption remain good, but if we see that inflation is falling sharply because the economy is entering a recession, then the joy in declining inflation will eventually shift in a phase He sees in them that the company’s profits are weaker than analysts think, and then the US stock market in particular looks very expensive, he says to me.

On Wednesday, Central Bank Governor Jerome Powell delivered his final interest rate decision of the year. The market is pricing in two rate hikes, which would send the key interest rate in the world’s largest economy into the 4.00-4.25 percent range.

prone to rise

According to Chief Economist Knut A. Magnussen at DNB Markets, it has obviously been reported that the pace of interest rate increases may now slow, but also that the interest rate path will be higher than it was in September.

“In this way, the Fed is likely trying to prevent the markets from viewing the small increase as too positive. The reason is that the central bank is trying to slow down the economy, and the important effects are running through the financial markets. Then things don’t go well with the positive market reactions,” she said. wrote in a report on Tuesday.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For additional terms look here.