(Washington) Inflation started to rise again in December in the United States after several months of decline, due in particular to housing prices, a new obstacle for Joe Biden on the eve of the Republican primaries for the presidential election of november.
Prices increased by 3.4% year-on-year in December, compared to 3.1% in November, according to the CPI index published Thursday by the Department of Labor, and on which pensions are indexed.
That’s more than the slight rebound, to 3.2%, that analysts had expected, according to the Market Watch consensus.
Over one month alone, the increase also accelerated, to 0.3% compared to 0.1% the previous month.
Housing prices “continued to rise in December, contributing more than half of the monthly increase,” the Labor Department said in its statement.
Prices of furnishing items, on the other hand, have fallen. As well as those of certain services to individuals.
Joe Biden said in a statement that “much remains to be done to lower costs for American families and workers.”
“Make no mistake: extremist Republicans have no plans to lower the cost of living for households,” said the Democratic president, well aware that the still high prices in the United States are, with his age, the main handicap in his campaign for a second term.
The Republican Party begins its primaries on Monday to nominate its candidate for the November presidential election, with former President Donald Trump as the favorite.
They regularly accuse Joe Biden of fueling inflation by adopting vast stimulus and investment spending after the COVID-19 crisis.
This rebound in inflation comes after several encouraging months.
“Two steps forward, one step back in this battle against inflation, and December is clearly a step back,” said Robert Frick, an economist at Navy Federal Credit Union.
But if we remove volatile food and energy prices, so-called core inflation slows, to 3.9% over one year from 4.0% in November, and remains stable over one month , at 0.3%.
“Beyond monthly variations, the data overall shows continued but slow progress in reducing inflation towards the 2% target,” said Rubeela Farooqi, economist for High Frequency Economics.
The price increase had reached 9.1% year-on-year in June 2022, the highest rate since 1981.
However, continuing to bring down inflation, without causing a recession or increasing the unemployment rate, seems within reach.
“We are enjoying a soft landing,” US Treasury Secretary Janet Yellen insisted on Monday on the sidelines of a trip to Vienna (Virginia).
The year 2024 should also be marked by a drop in interest rates, which should make it easier for consumers to borrow, a method of purchasing that Americans are fond of, and not just to buy houses or cars.
Faced with rising prices, it is the American central bank (Fed), more than the White House, which holds the cards. It has raised its rates since March 2022, to increase the cost of credit, and thus discourage consumption.
“Inflation data from the last six months indicates that the measures […] have had the desired effect, namely a better balance between supply and demand”, greeted Monday, Michelle Bowman, a governor of the Fed, however, warning of the risks that persist.
“Recent indicators are very encouraging,” the President of the New York Fed, John Williams, even underlined on Wednesday.
The Fed, at its last meeting in mid-December, kept rates in the range of 5.25 to 5.50%, and anticipates several cuts in 2024.
Its preferred inflation measure, the PCE index, fell in November to the lowest since early 2021, at 2.6% year-on-year. December figures will be released on January 26.