Inflation Rate (CPI)

Previous: 6.2%

Forecast: 6.8%

The inflation rate (CPI) measures the average change in price of a basket of consumer goods and services. Lower than expected inflation is bullish, while higher than expected inflation is bearish.

The annual inflation rate in the US accelerated to 7% in the last month of 2021, a fresh high since June of 1982, in line with market expectations and compared to 6.8% in November. Energy was the biggest contributor to the gain but the rise was smaller than in November (29.3% vs 33.3%), with gasoline prices surging 49.6% vs 58.1%. Inflation accelerated however for shelter (4.1% vs 3.8%); food (6.3% vs 6.1%), namely food at home (6.5% vs 6.4%); new vehicles (11.8% vs 11.1%); used cars and trucks (37.3% vs 31.4%); apparel (5.8% vs 5%); and medical care services (2.5% vs 2.1%). Inflation spiked in 2021 due to pandemic-induced supply constraints, soaring energy costs, labour shortages, increasing demand and a low base effect from 2020. Inflationary pressures are likely to last well into the middle of 2022 and Fed Chair Powell recently pledged to do what’s necessary to contain an inflation surge including increasing interest rates. source: U.S. Bureau of Labor Statistics