US Consumer Price Index (CPI) Exceeds Expectations, Registers a 3.4% Rise! Bitcoin Price Sets Sights on Breaking $48K
US CPI Inflation Surpasses Expectations at 3.4%
In a surprising turn of events, the US Consumer Price Index (CPI) has exceeded expectations by registering a 3.4% increase. This unexpected development indicates a persistent inflationary pressure in the American economy. As a result, the price of Bitcoin is breaking through its consolidation near $46K and is now aiming for the $48K mark.
Climb in US CPI Inflation to 3.4%
The US Bureau of Labor Statistics (BLS) announced on Thursday that inflation in the US, as measured by the Consumer Price Index (CPI), rose to 3.4% annually in December. This increase, surpassing November’s 3.1% rise, went beyond market projections of 3.2%. Moreover, on a month-to-month basis, the CPI experienced a 0.3% uptick, surpassing analysts’ expectations of a 0.2% rise.
Core CPI Matches Expectations
The Core Consumer Price Index (CPI), which excludes the more volatile food and energy prices, met expectations with a 0.3% monthly increase. Over the year, the Core CPI observed a rise of 3.9%, slightly lower than November’s 4%. The BLS highlighted in its press release that the shelter index continued its upward trend in December, contributing to more than half of the overall monthly increase in all items.
Energy and Food Prices on the Rise
Energy prices saw a 0.4% increase during the month, driven by hikes in both electricity and gasoline indexes, which more than compensated for the decline in the natural gas index. The food index recorded a 0.2% increase in December, in line with the previous month’s rise. Within this category, the index for food at home rose by 0.1%, while the index for food away from home experienced a slightly higher increase of 0.3%.
US Dollar Strengthens After Inflation Data Release
Following the release of the inflation data, the US Dollar gained strength against other currencies. As of the latest update, the US Dollar Index had risen by 0.05% for the day, standing at 102.6.
Bitcoin Price Aims for $48K
Although the approval of a spot ETF by the SEC did not provide the anticipated boost for Bitcoin’s price to reach $48,000, the increasing inflation rate is now driving demand for Bitcoin. This comes as various ETFs continue to be traded on exchanges. Bitcoin’s price has experienced a significant increase, rising from a low of $46,800 to a high near $48,000.
Investors Turn to Bitcoin as a Hedge Against Inflation
In times of rising inflation, investors often seek refuge in cryptocurrencies. While traditional assets tend to lose value, Bitcoin’s deflationary nature, due to its capped supply, leads to a surge in buying demand.
Inflation Shows Signs of Continuing Concerns
Inflation, which experienced a decline in the autumn, saw a slight increase in December. This rise suggests that it may be premature to declare an end to worries following the most significant surge in consumer prices in four decades.
Primary Drivers of Inflation Rise
The main factors contributing to this increase were essential living costs, such as rising rent prices, as well as higher food and gasoline prices. Additionally, there was an unexpected rise in the prices of used cars.