A report this morning from the U.S. Commerce Department showed that prices rose only 5% in December 2022 from a year earlier, down from the 5.5% year-over-year increase in November, according to a report from the Associated Press. It was the third straight drop.
Consumer spending fell 0.2% from November to December and was revised lower to show a drop of 0.1% from October to November. Last year’s holiday sales were sluggish for many retailers, and the overall spending figures for the final two months of 2022 were the weakest in two years.
The Federal Reserve has been steadily driving up borrowing rates across the economy, seeking to slow spending, growth, and surging prices. Last year, the Fed raised its benchmark rate seven times, and next week it’s set to do so again. The central bank’s key rate, which affects many consumer and business loans, is now in a range of 4.25% to 4.5%, up from near zero last March.
