A highly anticipated report released by the Labour Department last Wednesday showed that US consumer prices rose by 0.5 per cent in December to push the increase in the cost-of-living last year to seven per cent. That is the highest in almost 40 years and indicates that high inflation is likely to persist well into 2022.

The gain in the consumer price index exceeded the 0.4 per cent forecast by economists.

Core consumer price inflation, which leaves out volatile food and energy prices, rose by 0.6 per cent last month, according to the report. That pushed the increase over the past 12 months to 5.5 per cent from 4.9 per cent − a 31-year high.

Inflation has soared in the past months due to strong customer demand and ongoing labour and supply shortages and caused the Federal Reserve to signal that it will tighten monetary conditions earlier than anticipated.

Meanwhile, British lenders expect demand for secured lending to fall in the first quarter, while that for unsecured lending is expected to increase, the latest Credit Conditions Survey from the Bank of England showed on Thursday. Lenders observed a decrease in demand for secured lending for house purchases in the three months to the end of November and it was expected to fall again in the coming quarter.

Meanwhile, demand for unsecured lending grew in the fourth quarter and was forecast to improve again in the coming three months. Within the overall figure, demand for both credit card lending and other unsecured lending increased in the fourth quarter.

Finally, China’s inflation eased in December thanks to falling food and commodity costs, with analysts saying Wednesday’s figures give policymakers room to launch measures to kickstart the stuttering economy, including interest rate cuts.

Consumer price inflation slowed to 1.5 per cent in December from 2.3 per cent in November, the National Bureau of Statistics said. The rate was expected to slow to 1.8 per cent. Food prices fell by 1.2 per cent from a year earlier and non-food prices advanced by 2.1 per cent. Core inflation held steady at 1.2 per cent.

 This report was prepared by Bank of Valletta plc for general information purposes only.

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