Consumer prices the slowdown in inflation, i.e. inflation, has continued in the United States.
According to the latest data published by the Ministry of Labor on Thursday, the inflation rate was 6.5 percent in December, while it was 7.1 percent in November.
In December, compared to the corresponding time last year, the price of energy rose by 7.3 percent, food by 10.4 percent, and housing by 7.5 percent.
Compared to November, energy became cheaper by 4.5 percent, but food became more expensive by 0.3 percent and housing by 0.8 percent.
At its best the inflation rate was last year in July, when consumer prices rose by 9.1 percent from a year ago. During the autumn, inflation has slowed down by 2.6 percentage points.
Core inflation, closely monitored by the central bank, was 5.7 percent in December, which is 0.3 percentage points slower than in November.
Core inflation is an important measure because it removes the effect of sensitively changing energy and food on consumer prices.
Both overall inflation and core inflation corresponded to market expectations.
Key ones the reasons for the exceptionally fast inflation are international supply disturbances and high demand, which has been increased especially by the strong fiscal stimulus.
In the United States, the economy is also overheated, as the demand for labor is greater than the supply. This has led to relatively large salary increases, which have been apt to accelerate inflation even more.
According to the central bank’s price stability objective, the inflation rate should be two percent on average over a long period of time.
In December, the central bank tightened monetary policy by 0.50 percentage points. Before that, it resorted four times in a row to an exceptionally large interest rate increase of 0.75 percentage points. All in all, the central bank raised the key interest rate seven times last year.
By tightening monetary policy, the central bank aims to bring demand and supply into better balance, in which case inflation would slow down to closer to two percent. It is almost certain that the central bank will continue raising interest rates in early February.
The tightening of monetary policy usually starts to slow down inflation after half a year and reaches its full effect after more than a year.
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