(Photo by Xu Jinbai/VCG via Getty Images)
- US inflation has steadily cooled since mid-2022, thanks to large interest-rate increases by the Federal Reserve.
- However, a four-month drop in the dollar is threatening to derail that trend by raising the cost of imported goods.
- The dollar index has fallen by more than 11% from a peak reached in late September.
US consumers are getting used to being pleasantly surprised by cooling prices each month, with inflation extending a sustained decline thanks to the Federal Reserve's interest-rate hikes.
Annual increases in the Consumer Price Index slowed to 6.5% in December, the least in over a year, as disruptions to global goods supply chains caused by COVID-19 eased.