Prices dropped in the U.S. in December for the first time since May 2020, in an encouraging sign that the inflation crisis may be easing, reports The Guardian.

According to the latest consumer price index (CPI) — which measures a broad range of goods and services — the cost of living dropped 0.1% in December 2022, compared with a rise of 0.1% in November. The annual rate of inflation fell to 6.5% from 7.1% in the previous month, the sixth straight month of yearly declines, according to the Bureau of Labor Statistics.

Falling gas prices were by far the largest contributor to the monthly decrease, falling 9.4% over the month, more than offsetting increases in shelter indexes, which rose 0.8% over the month and were 7.5% higher than a year ago.

The news cheered European investors and helped the FTSE 100 index rise to a four-year high in London, but was met with a more muted response on Wall Street, with most of the major indices making small gains.

In a research note Oxford Economics said the latest CPI survey was “another small step in the right direction” but said it was unlikely to deter to the Federal Reserve from continuing raising rates as it fights inflation.
U.S. inflation peaked at 9.1% in June, its highest rate since 1982.