Stock market: Core Consumer Price Index recorded its fastest increase since 1991

This Wednesday, January 12, in the stock market, there was a rise in stocks as investors awaited a new report about inflation, which has reached the highest in decades. All this came hours after Federal Reversal Chairman Jerome Powell gave his comments reaffirming that, if necessary, the central bank would take action to curb rising prices.

Last December prices rose at a 7% year-over-year rate at the end of 2021, shown in the Bureau of Labor Statistics’ Consumer Price Index (CPI), marking the fastest increase since 1982. The price accelerated from November’s already high 6.8% increase, matching consensus estimates based on Bloomberg data.

A year-over-year rate of 7.0% at the end of 2021, the fastest increase in the stock market since 1982.

Taking it down to categories, used car and truck prices and lodging prices contributed the most to the overall increase. The index for the first two accelerated to a 3.5% month-over-month increase in December, up from 2.5% in November, thus rising for the third consecutive month. Similarly, the index also rose by a remarkable 37.3% compared to the same month last year.

The core measure of consumer price changes, which excludes volatile food and energy prices, rose 5.5% in December from a year ago, the fastest increase since 1991. The rise accelerated from 4.9% y/y in November.

The markets, at least temporarily, found relief in Federal Reserve Chairman Jerome Powell’s assurances about the stock market.

Wednesday’s stock market movements followed a rally on Tuesday, January 11, when the markets, at least temporarily, found relief in the assurances given by Federal Reserve Chairman Jerome Powell about the interventions that the central bank would make, given the need to alleviate rising prices. At his reappointment hearing before the Senate Banking Committee, the central bank leader reiterated the use of the Fed’s policy tools to lower inflation.

If we see inflation persisting at high levels, longer than expected, if we have to raise interest rates more over time, then we will.

Powell, during the hearing.

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