The federal government announced this week that inflation had again risen in December 2023, after several months of a slight pullback. The news will likely complicate President Joe Biden’s economic messaging as he continues his reelection bid.
The Department of Labor released figures regarding how much Americans are spending on goods. The consumer price index increased 3.4% over costs from December 2022. The rate was also higher than the anticipated 3.2%.
The figure also represents an increase in month-over-month inflation. In November 2023, prices were 3.1% higher than in November of the previous year.
That made for a 0.3% monthly rate, which was higher than the 0.2% registered in November. Furthermore, the figure was also higher than the expected 0.2% rate.
A number of different prices increased the most last month. At an annualized rate, different types of food, including food outside the home, vegetables and baby food helped lead the rise in inflation. Furthermore, the month also saw a significant increase in the average auto insurance policy and veterinary services.
The rise in consumer prices came despite the fact that fuel prices have generally decreased over the last several weeks.
Because of Bidenomics’ high prices, people in my state have to use their credit card more.
People have to spend their savings.
Pres Biden’s inflation is a cancer on the American Dream. pic.twitter.com/PUedborAFM
— John Kennedy (@SenJohnKennedy) January 11, 2024
Core prices, which do not include the cost of food or energy, increased by 0.3%, which was higher than the 0.2 that markets were predicting. Furthermore, at an annualized rate, these prices were 3.9% higher than in December 2022.
Wall Street reacted negatively to the news, taking positive trading midday Thursday significantly downward.
An unexpected increase in inflation makes it significantly more likely that the Federal Reserve will raise rates later this year. Investors had hoped for several rate cuts in 2024, especially as the current federal funds rate is at its highest level in about 20 years.
Slowing inflation brought about a small reduction in mortgage and other loan rates. However, the prospect of higher inflation with possible lower economic growth could spur on cautious behavior in the markets.
