The release of the December 2024 Inflation report by the U.S. Bureau of Labor Statistics on January 15th, 2025, has painted an insightful picture of the economic landscape. Let’s delve into the details and understand the nuances of the numbers presented.
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Inflation Figures:
- Annual inflation saw a rise from 2.7% in November to 2.9% in December.
- While it may seem like a 0.2% increase, the actual rise was 0.14% when calculated to two decimal places.
- Monthly inflation stood at 0.04% in December, contributing to the annual increase due to the negative -0.10% in December 2023.
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Inflation Prediction:
- The actual annual inflation of 2.89% in December 2024 closely aligned with the Extreme High prediction of 2.90%. The Consumer Price Index (CPI) rose from 315.493 to 315.605.
- Noteworthy sectors driving the inflation rates include services like food away from home, energy services, shelter, transportation, and medical care services.
- BLS Commentary:
- The Consumer Price Index for All Urban Consumers (CPI-U) exhibited a 0.4% increase on a seasonally adjusted basis in December. The energy and food indices contributed significantly to this rise.
- Notable increases were observed in various sectors such as shelter, airline fares, used cars, new vehicles, motor vehicle insurance, and medical care, while personal care, communication, and alcoholic beverages saw a decrease.
Looking beyond the figures, it’s evident that energy prices are playing a crucial role in shaping inflation trends. Over the last months, energy prices have exerted pressure to dampen overall inflation rates.
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FED Monetary Policy Insights:
- The Federal Reserve’s assets are on a downward trajectory, whereas the M2 money supply continues to rise steadily.
- With the FED funds rates falling to 4.48%, the monetary policy landscape exhibits a dynamic interplay between diverging indicators.
- Monthly Inflation Trends:
- December 2024’s monthly inflation rate of 0.04% portrays an interesting narrative when observed in comparison to previous years. Notably, variations in monthly rates have had a direct impact on annual inflation trends.
In conclusion, as we navigate through the fluctuations in inflation rates, it becomes imperative to stay informed and vigilant in monitoring the evolving economic indicators. By keeping a keen eye on these trends, we can better position ourselves to adapt and thrive in a dynamic financial environment.
