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Feb 14, 2024

US Inflation Drop: What's Happening?

By: Bhumi Shrivastava

The announcement triggered a sell-off on Wall Street, with the S&P 500 plummeting by 1.3% and the Dow Jones industrial average declining by 1.1%, shaking investor confidence.

Market Turmoil Follows

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Despite a slight retreat from its peak, inflation remains elevated, standing at 3.1% in January, impacting consumers' purchasing power and economic outlook.

Lingering Inflation Pressures

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As President Joe Biden seeks re-election, he faces the daunting task of convincing voters that the economy is working in their favor amidst persistent inflation concerns.

Biden's Economic Narrative

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The core consumer price index, excluding volatile food and energy prices, rose by 0.4% in January, signaling underlying inflationary pressures persisting in key sectors.

Core Index Highlights

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Rising costs of shelter, motor vehicle insurance, and medical care were identified as primary drivers behind January's inflationary surge, exacerbating financial strain for many Americans.

Contributing Factors

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With inflation nearing the Federal Reserve's target of 2%, policymakers are contemplating the first interest rate cut in four years, sparking speculation and uncertainty in financial markets.

Fed's Response 

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