Last month, the cheaper prices observed at the pumps pushed down the inflation rate of the United States of America for the first time in a period of nine months.
The statistics that were released today reveal that the consumer price index (CPI) of the country dropped by 0.1 percentage points last December to 1.9 percent, making the decline last December the first drop since March.
However, when stripping out the changes to the price of food and energy, the inflation rose by 0.2 percent for the third consecutive month. The drop in oil prices has concealed the inflationary pressures for other typical household expenses such as car insurance and rent.
The increase in the cost of living over the period of the past 12 months slowed to 1.9 percent from 2.2 percent, marking the first time that it has dropped below the key 2 percent mark since August 2017.
The oil prices have dropped across the globe since October, with Brent crude, the international standard, down by approximately 40 percent since the recorded highs that amounted to $85.
Today, the price dropped by a further two percent after a week-long rally which saw it recover from year-lows of approximately $51 per barrel last December.
Moderate inflation gives the Americans a bigger financial cushion and could grant more leeway and support to the policy of the Federal Reserve on interest rate hikes. It is anticipated to increase the rates twice this year.
Aberdeen Standard Investments’ James McCann, stated: “The Fed will take this as further proof that price pressures are building more slowly than some have feared based on the strong growth of late and tight labour market.”
He added: “It certainly seems to justify the Fed’s message about being more patient on rate increases.”
The costs of healthcare increased by 0.3 percent. It was driven by the increases in hospital services, however, it was tempered by a decline in the cost of prescriptions.