The US is under less pressure due to rising costs of living thanks to a substantial decline in energy prices, particularly gasoline.
According to the US Labor Department, annual US inflation was 6.5% as of the end of December, down from 7.1% in November.
That represented the sixth consecutive month that the pace decreased and was the smallest gain in more than a year.
When compared to November, some products, including oranges and bananas, even saw outright price drops.
Due to the decrease in gasoline prices, prices overall decreased by 0.1% during the course of the month.
President Joe Biden praised the report in remarks on Thursday.
“We’re clearly moving in the right direction,” he said. “It all adds up to a real break for consumers, more breathing room for families.”
However, some economists expressed concern that the price relief from energy was not transferring to other goods as swiftly as predicted.
For instance, the cost of clothing increased 0.5% from November to December and increased 2.9% from the previous year.
Paul Alsworth, chief North American economist for Capital Economics, stated that “goods deflation isn’t broadening out quite as quickly as we predicted.”
In June, inflation reached 9.1%, the highest level in more than forty years, as a result of the war in Ukraine, which disrupted supply of food and energy.
In response, the US central bank raised interest rates at their quickest rate in decades last year in an effort to bring inflation back to the 2% level it considered healthy.
Jerome Powell, the chairman of the Federal Reserve, stated last month that the bank would begin to act less aggressively while monitoring how the changes are affecting the economy.
The Federal Reserve anticipates that raising borrowing costs will reduce demand for pricey goods like homes and cars, slowing the economy and easing the pressures driving up prices.
Its struggle is being widely followed since the slowdown brought on by rising rates also runs the possibility of sending the biggest economy in the world into a recession.