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In the US, prices like gas, used cars, medical care, and flights are decreasing, slowing inflation and the rate at which prices go up.
Figures from the US Labor Department show that over the past 12 months, inflation in the US was 7.1%, down from 7.7% in October.
That was the slowest rate in almost a year, and it was better than analysts had thought.
But even though things are getting better all around, the cost of some things, like housing, keeps increasing.
To stop inflation from getting out of hand, the US central bank has raised interest rates faster this year than in decades.
Jerome Powell, the Federal Reserve boss, said earlier this month that the bank would start to move less quickly to see how the changes affect the economy.
The Federal Reserve hopes to reduce the demand for expensive things like homes and cars by making it more expensive to borrow money. This will slow down the economy and take some of the pressure off prices.
Davis Wesson, a comedian in New York, said that he has lived in places with high housing costs for a long time but that the past year has been tough.
The rent for his girlfriend’s one-bedroom apartment went from $2,100 a month to almost $3,000 a month, so the two had to look for a cheaper place to live. He said that even if inflation starts to go down, he will have to pay more on the credit card debt he got when he lost his job because of the pandemic.
Principal Asset Management’s chief global strategist, Seema Shah, said that the Federal Reserve still has work to get inflation back to its target of 2%. Still, the fact that inflation is going down gives people hope that it “might be tamed in the next year.”
The Fed’s efforts to eliminate inflation have been helped by the fact that many of the problems with the supply chain that came up during the pandemic have been fixed, and the price of gasoline has dropped sharply.
The AAA said last week that the average price of a gallon of gas in the US is now less than it was a year ago. Part of this is that oil prices have gone down because investors think demand will go down in the coming months.
In the past year, grocery prices have increased by 12%, while housing costs have increased by 7.1%.
If you leave out food and energy prices, which tend to change a lot, the Labor Department said that housing was responsible for almost half of the rise in inflation over the past year.
When the news was better than expected, US stocks went up, while the dollar fell against a group of currencies. This was because investors bet the interest rate hikes pushing the dollar would slow.
The Fed hints at raising interest rates again
The US central bank raised interest rates again and said that more increases would be needed to slow the rate at which prices are going up.
But policymakers are starting to be more careful because there are signs that the country’s worst inflation in decades may slow down.
They agreed to raise the bank’s key interest rate by 0.5 percentage points, bringing it to its highest level in 15 years.
But that was a smaller increase than what had been said in recent news.
This year, the Fed has raised interest rates at a rate never seen before. This is because inflation is at its highest level in 40 years.
With the most recent increase, the seventh in a row, the target range for the Fed’s benchmark rate went from almost zero in March to 4.25–4.5%.
The Fed hopes to slow down the economy by making it more expensive to borrow money and reducing price pressures. But it doesn’t want to cause a slowdown that hurts more than it needs to.
Risks are a problem for central banks in other countries, too.
The Bank of England has warned that the country is going through its most prolonged recession. On Thursday, after approving an even more significant increase last month, it is expected to announce a 0.5 percentage point increase.
Job growth shows that inflation will be a hard fight
Last month, job growth in the US stayed strong, and wages went up sharply. This shows that the world’s largest economy still has a hard fight ahead of it as it tries to keep prices from increasing even more.
From last year to this year, employers added 263,000 jobs, and the average hourly wage went up by 5.1%.
The rate of unemployment stayed at 3.7%.
Even though the US central bank was trying to slow down the economy and keep prices stable by raising interest rates, the report was better than expected.
This year, the Federal Reserve raised interest rates on loans at the fastest rate since the 1980s. This was done because inflation, or the rate at which prices are going up, is close to a 40-year high.
Analysts have been saying that the number of jobs would go down because businesses would slow their growth or cut back because of the higher costs.
Read Also: US job growth not enough to stop inflation
But there have been reports of job cuts in some areas, like housing and technology, but a report from the US Labor Department on Friday shows that the job market is still strong.
In November, most people were hired by bars, restaurants, and healthcare companies. Because of this, even industries like construction and manufacturing, which were thought to be in trouble, saw job growth.