US inflation levels fell slightly in January, from 6.5% to 6.4%. However, inflation remains higher than expected, raising concerns among investors that the US central bank will continue to raise the benchmark federal funds rate.
Inflation in the US remains high, creating uncertainty in the markets
Inflation in the United States exceeded the expectations of analysts and economists for January 2023. US Department of Labor. released the Consumer Price Index (CPI) on February 14, which measures the value of goods and services across the country. From December 2022 to January 2023, the rate dropped from 6.5% to 6.4%. However, over the 12-month period, prices increased by 0.5%.
In addition, the core CPI rose 0.4% in the month and 5.6% year over year. According to the US Department of Labor, “the housing index was the largest contributor to the monthly increase for all items, accounting for nearly half of the increase, with the food, gasoline, and natural gas indexes also contributing.” The latest inflation report has caused concern among investors that US Federal Reserve Chairman Jerome Powell will continue to raise rates.
At the last Federal Open Market Committee (FOMC) meeting, the Fed was dovish and only raised the fed funds rate by 0.25%. Powell stated that the central bank has been monitoring the “disinflationary process”, but stressed that it is still early days. “There was an expectation that it will go away quickly and painlessly, and I don’t think that’s guaranteed at all,” saying Jerome Powell, the Fed Chairman, at an event last week.
Following the Labor Department’s CPI report, stocks, precious metals, and cryptocurrencies all declined slightly, but have since rallied. As of 9:30am ET Tuesday, all four benchmark US stock indices (DJIA, SPX, COMP, RUT) are in positive territory.
Similarly, the crypto economy It is recovering after experiencing some volatility immediately after the CPI release, and is up 0.7% today. While silver is down 1.23% at the time of writing, the price of gold per ounce has risen 0.18% based on the New York Spot Price on Tuesday.
What do you think of the latest US inflation report? Let us know what you think about this topic in the comments section below.
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