12 a man arranges produce at best world supermarket in the mount pleasant neighborhood of washington dc us august 19 2022 reuterssarah silbiger washington jan 12 reuters  us consumer prices unexpectedly fell for the first time in more than 212 years in december amid declining prices for gasoline and other goods suggesting that inflation was now on a sustained downward trend the consumer price index dipped 01 last month after gaining 01 in november the labor department said on thursday that was the first decline in the cpi since may 2020 when the economy was reeling from the first wave of covid19 infections economists polled by reuters had forecast the cpi unchanged in the 12 months through december the cpi increased 65 that was the smallest rise since october 2021 and followed a 71 advance in november the annual cpi peaked at 91 in june which was the biggest increase since november 1981 inflation remains well above the federal reserves 2 target price pressures are subsiding as the us central banks fastest monetary policy tightening cycle since the 1980s dampens demand and bottlenecks in the supply chains ease gasoline prices fell 125 in december according to data from the us energy information administration prices for used cars and trucks are also declining as the supply of motor vehicles improves ebbing demand has left retailers holding excess merchandise forcing them to offer discounts for products like apparel and furniture while goods disinflation has set in services prices remain solid underpinned by sticky rents even stripping out rents services inflation is firm reflecting stillstrong wage growth the fed last year raised its policy rate by 425 basis points from near zero to a 425450 range the highest since late 2007 in december it projected at least an additional 75 basis points of hikes in borrowing costs by the end of 2023 excluding the volatile food and energy components the cpi climbed 03 last month after rising 02 in november in the 12 months through december the socalled core cpi increased 57 after advancing 60 in november the moderation in inflation will be welcomed by fed officials but they will probably want to see more compelling evidence of abating prices pressures before pausing rate hikes the labor market which has remained tight will be key in this regard the unemployment rate is back at a fivedecade low of 35 there were 17 jobs for every unemployed person in november a separate report from the labor department on thursday showed initial claims for state unemployment benefits fell 1000 to a seasonally adjusted 205000 for the week ended jan 7 economists had forecast 215000 claims for the latest week part of the surprise drop in claims reflects challenges adjusting the data for seasonal fluctuations at the start of the year nevertheless claims have remained low despite high profile layoffs in the technology industry as well as job cuts in interest ratesensitive sectors like finance and housing economists say companies are for now reluctant to send workers home after difficulties finding labor during the pandemic they however expect claims to rise by the second half of the year as higher borrowing costs choke demand and push the economy into recession the claims report also showed the number of people receiving benefits after an initial week of aid a proxy for hiring dropped 63000 to 1634 million in the week ending dec 31 the government reported last week the economy created 223000 jobs in december more than double the 100000 that economists say the fed wants to see to be confident inflation is cooling a total of 45 million jobs were added in 2022