President Joe Biden’s economy has taken another significant step in its return greatness. Not only did December see a reduction in inflation, but the wholesale prices also dropped from 7.3 percent to 6.2 percent on the annual basis. That was the greatest drop month-per-month since June 2022.
President Biden has argued that inflation was a temporary event caused by a whiplash effect after the pandemic. And that is proving true. The job market remains active as prices decline, CNN reported.
Economist at the think tank Center for Economic Policy and Research Dean Baker said in a statement to The Hill:
‘This supports what many of us had said last year, the inflation was temporary, attributable to supply shocks from the pandemic closures and then the war in Ukraine. With the economy reopening, most of the impact of the supply shocks is being reversed, with many of the items that had seen the sharpest price increases now seeing deflation.’
American buyers have also seen inflation on a downward trend. In December, it dropped 0.1 percent to 6.5 percent on an annual basis. Although the 0.1 decline may seem minor, it added up to 6.5 percent annually compared to 9.1 percent in mid-2022.
The S&P 500 went up Wednesday when it saw the latest data pointing toward inflation “while still high, is beginning to ease,” according to CNBC:
‘The broad market index climbed 0.4%, while the Nasdaq Composite advanced 0.9% and was going for its eighth straight-up day. Meanwhile, the Dow Jones Industrial Average fell 95 points or 0.3%.’
The producer price index (PPI) data showed its surprising results on Wednesday. Economists had been anticipating an increase of 6.8 percent annual increase. Food and energy have been exceptionally dynamic due to international variables, but with them removed from the equation:
‘core PPI fell to 4.6 percent in December from 4.9 percent the previous month.’
The PPI works by taking the business-to-business price prior to reaching the American public. The most recent inflation period began in 2020 and was caused by supply chain bottlenecks. Given this, the inflation trend appears to be in a steadily falling pattern. This inflation move was caused by a 1.6 percent drop in goods in tandem with the cost of services increasing 0.1 percent:
‘The sharpest monthly price declines for individual goods were seen in a 9.4 percent drop in fresh and dry vegetables, a 13.4 percent drop in gasoline, a 27 percent drop in No. 2 diesel fuel, and a 5.9 percent drop in grains. Those are seasonally adjusted single month percent changes.’
Then there was the wholesale cost of fresh eggs which has increased by a dramatic 25 percent from November to December. However, the increase was due to an outbreak of avian flu. In addition, the wholesale price of iron and steel scrap metal increased by 8.3 percent in one month.
Gloria Christie is a political journalist for the liberal online newspaper The Bipartisan Report. Find her here on Facebook. Or at Three White Lions her book written in her own unique style with a twist of humor on Amazon Kindle Vella and the Gloria Christie Three White Lions podcast on Apple, Spotify, Amazon Music, etc. Christie’s Mueller Report Adventures In Bite-Sizes a real-life compelling spy mystery (in progress).