The latest inflation report just dropped

The Consumer Price Index (CPI), America’s most widely-used measure of inflation, is channeling Fall Out Boy and going down, down from an earlier round.

According to Labor Department figures released yesterday, inflation rose 6.5% in December from the same month a year ago. That’s down from 7.1% in November, and the index’s lowest annual figure since October 2021.

🔢 By the numbers… On a month-to-month basis, the CPI declined 0.1% in December, driven mainly by price decreases for fuel oil (-16.6%), all types of gasoline (-9.4%), and used vehicles (-2.5%).

• The core index – which excludes often-volatile food and energy prices – rose 0.3% month over month, up from 0.2% in November.
• On a yearly basis, core inflation increased 5.7% in December, down from a 40-year high previously set in September (+6.6%).

📸 Big picture: The CPI has now fallen for six straight months, down from a 40-year high of 9.1% in June. But as any chimp with a calculator could tell you, there’s still a gap between the current inflation reading (6.5%) and the 2% target the Fed is shooting for.

And you know what that means: more interest rate hikes are probably coming. Following the conclusion of its next meeting on February 1, the central bank’s policy-making committee is widely expected to raise baseline interest rates for the 8th straight time.