THE ECONOMIC PERISCOPE - JANUARY 2024

THE ECONOMIC PERISCOPE - JANUARY 2024

Monday, January 29 2024

The US inflation rate has increased to 3.4 percent for the 12 months ending December2023, higher than the 3.1- percent increase in November2023, indicating that easing of US policy rate might take a bit longer than anticipated. The increase is higher than market expectation of 3.2%, due to the slow pace of calming down the energy prices. For instance, Energy costs dropped 2% (vs -5.4% in November), with gasoline declining 1.9% (vs -8.9%), utility (piped) gas service falling 13.8% (vs -10.4%) and fuel oil sinking 14.7% (vs -24.8%).1 According to the Bureau of Labour Statistics, US Department of Labour (BLS), Annual core inflation rate eased to 3.9%, below 4% in the previous period but above expectations of 3.8%. Compared to November, consumer prices went up 0.3%, the most in three months and above forecasts of 0.2%. The U.S. Dollar Index (DXY) has slightly moderated at 102.37 (-0.03%) on 15 Jan’24, the USD can be expected to soften in 2024 going forward as softer US policy rate might relatively weaken dollar vis-à-vis other currencies. The Fed minutes have shown there is only a thought of possible rate cut depending on the inflation situation, but still it is too early to expect a rate cut before June’24.

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