U.S. inflation has slowed for six consecutive months

January 10, 2023. At a grocery store in Glenview, Illinois, USA, a customer buys eggs.

WASHINGTON — U.S. consumer price index (CPI) growth slowed again in December, marking the sixth consecutive month of decline in CPI after reaching a 40-year high in mid-2022, data released by the U.S. government on Thursday.

The Bureau of Labor Statistics said the consumer price index rose 6.5 percent annualized last month, down from 7.1 percent in November and well below its peak of 9.1 percent in June. Prices in December edged down 0.1 percentage points from November.

While U.S. consumers may feel some relief when buying groceries and other goods, inflation is still well above the 2 percent normal level pursued by policymakers at the Federal Reserve.

Some U.S. economists still predict a recession later this year in the world’s largest economy, but job growth remains strong, with 223,000 new jobs added in December.

The Labor Department report Thursday said jobless claims fell to a 15-week low of 205,000 last week. Jobless claims are often seen as an indicator of layoffs. Some high-profile firms, such as Goldman Sachs, investment banking, and Cable News Network, have laid off jobs, but many others are still looking to hire more workers.

The unemployment rate in the United States is 3.5 percent, the lowest level in 53 years.

Still, inflation remains a major concern for Fed policymakers.

The Fed raised its benchmark interest rate seven times last year to slow job growth and raise borrowing costs for businesses and consumers, on the assumption that higher borrowing costs would reduce inflation.

This strategy seems to be working, but progress is slow.

Previously, the Fed has said it plans to raise interest rates two or three more times in the coming months before stopping further hikes but keeping its benchmark rate at a high level.