This Tuesday morning, there is
positive news for the people of the United States who have been burdened by
high costs. The Consumer Price Index (CPI), which tracks changes in consumer
prices for various goods and services, has shown a significant decrease in
inflation for December, bringing it to the lowest point in almost a year. The
latest CPI figure of 6.4% supports the idea of lowering inflation, which can
cause volatile assets like Bitcoin to increase in price; currently trading at
$21,633.
US CPI REPORTS 6.4% INFLATION
The Core CPI, which excludes
prices of volatile goods like food and gasoline, rose by 0.4% from the previous
month and increased by 5.6% from a year ago, slightly exceeding market
expectations. In September, it reached the highest level since August 1982 at
6.5%. The Bureau of Labor Statistics' closely watched index showed that
underlying consumer prices had increased the least in the past 15 months,
making it possible for the Federal Reserve to reduce interest rates it has been
implementing over the last few months.
The Labor Department stated that
the primary reason for the monthly price increase of 0.5% and the annual
inflation rate of 6.4% last month was the rising housing costs, which accounted
for 60% of the increase. The housing costs went up by 0.7% in January alone,
leading to an annual increase of 7.9%.
Several factors coincided during
the spring of 2021, leading to a surge in inflation and pushing price increases
to their highest levels since the period of stagflation in the early 1980s. The
COVID-19 pandemic caused a shortage of supply and an increase in demand.
Additionally, Russia's invasion of Ukraine impacted energy prices, while
trillions of dollars in fiscal and monetary stimulus led to an excess of money
chasing fewer goods, which were affected by supply chain issues.
MARKET REACTION
Although stock futures were
initially positive in anticipation of the January consumer pricing report
meeting market expectations, the release of the U.S. CPI data caused Dow Jones
Industrial Average futures contracts to decrease by 0.26%, or 45 points.
Futures for the Nasdaq 100 also dropped by 0.11%, while those of the S&P
500 declined by 0.15%, equivalent to a 5.5-point decrease.
The cryptocurrency market has had
mixed reactions, with the most valuable cryptocurrency by market
capitalization, Bitcoin (BTC), currently trading at $21,633, representing a
drop of 0.95% over the previous hour, but a gain of 0.20% over the past 24
hours. Meanwhile, the price of Ethereum (ETH) is maintaining its value at
$1,500 at the time of writing.
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