Overall, inflation in the US cooled in December, Thursday's numbers show, with consumer price data falling. [Inflation Is Turning the Corner – WSJ]
The headline 12-month consumer price index rose 6.5% in December. This is good news for the Federal Reserve and the White House, since inflation was at 7.1% in November, a decline largely due to lower gas prices and airline tickets.
The Federal Reserve believes inflation could be "unstable" in 2023, but expects the cooling to continue overall. He noted that rental and house prices are already falling.
Indeed, just as the United States was getting used to thinking that high inflation could continue, signs are emerging that inflation may have actually been transitory, as Federal Reserve officials initially thought.
This does not mean that the battle against inflation is over. Even the most favorable interpretation still leaves current underlying inflation above the Fed's 2% target. Nor does it mean that the Fed's initially positive diagnosis was correct. After all, it's precisely because the Fed changed that diagnosis and sharply raised interest rates last year to combat inflation that some prices are starting to fall, especially housing prices.
