Mike Schenk
CUNA Chief Economist Mike Schenk

CUNA economics: Inflation continues to cool in December

January 12, 2023

CUNA Chief Economist Mike Schenk issued the following statement in response to the Labor Department’s December Consumer Price Index Report:   

“Inflation pressures eased significantly in December – greatly boosting the odds that the Federal Reserve will pivot from its current aggressive policy stance. On a monthly basis, consumer prices fell 0.1%, the first decline since May 2020. On a year-over-year basis headline, CPI increased 6.5 percent and Core CPI (excluding volatile food and energy prices) was up 5.7%.   

“Headline price increases are at their lowest level in over a year and are substantially down from both the 9.0% June 2022 cyclical peak and from November’s 7.1% increase. While declining gasoline prices were the biggest contributor to December’s improvement in price increases broadly measured, the trend in core price changes also reflects moderation. 

“Inflation remains well above the Federal Reserve’s comfort zone, but price changes are trending in the right direction and most benchmark indicators – including a cooling labor market and softer wage growth data from the latest jobs report – suggest a continuation of the current trajectory. Importantly, business inflation expectations also remain on a broad declining trend. The Fed next meets at the end of January – and against this backdrop, it seems likely that any additional tightening will be more measured and modest. If so, that’s good news for borrowers – and for the economy as a whole."