span>span>Thursday 12th January /span>span>2023/span>span> - 13:45 (GMT)/span>/span>
The US Bureau of Labor Statistics has released data showing that American consumer prices continued to fall in December, further fuelling bets that the Federal Reserve will slow its recent aggressive interest rate hikes. The latest Consumer Price Index (CPI) reading of 6.5% is the sixth straight monthly drop and the lowest level since October 2021.
Falling energy costs have been the primary contributor to the slowdown, with gasoline prices declining 12% from November to December. Core inflation, which strips out volatile food and energy costs, also fell to 5.7% during the final month of 2022, the lowest level in a year and down from 6% in November.
The news follows last week's non-farm payrolls data that showed the US added 233,000 jobs in December, well above market expectations, and pushed unemployment back to a pre-pandemic low of 3.5%.
Analysts are now reconsidering whether the Federal Reserve will have to push interest rates far beyond the 5% expected by June as it continues to battle stubbornly high inflation.
GBP/USD and EUR/USD both moved higher following the data, with attention now turning to the Federal Reserve meeting later in the month where a less aggressive interest rate move is now looking likely.
