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Inflation report: Prices drop for first time since May 2020

The latest report is another sign the Federal Reserve's strategy of raising interest rates to cool inflation is working.

Shoppers facing months of high prices are starting to see some relief. 

A report from the Bureau of Labor Statistics shows inflation fell 0.1% from November to December. It's a tiny decrease, but significant because it's the first such drop since May of 2020.

One area of improvement is gas prices, which fell 9.4% in December from the prior month.

Price hikes at the grocery store are slowing down but remain high, increasing 11.8% in the past year. Some staples like eggs are skyrocketing, up 59.9% from December of 2021. The avian flu, better known as the bird flu, killed millions of chickens, which is leading to the shortages.

That's not only affecting consumers but also businesses that rely on eggs, like CC's Sweets in McAllen, Texas.

"I've kept my prices as low as I have for as long as I can. And if the eggs continue to increase in price, we will eventually have to raise the prices to make sure that we can make a living," baker Roberta Castillo says.

Even though eggs and some other foods are becoming more costly, overall, inflation is slowing down and is now at 6.5% on an annual basis. That's a big drop from the summer when it hit a 40-year high of 9.1%.

"Today's inflation numbers are good news, good news about our economy. We have more work to do but we are on the right track," said President Joe Biden during a Thursday morning press conference.

The latest inflation report is another sign the Federal Reserve's strategy of raising interest rates to cool inflation is working. It's believed the Central Bank will keep following that strategy.

"And that means that all interest rates, whether you're going out and borrowing a loan for a mortgage or a car, or you are financing a credit card balance, those interest rates will remain high," says CBS News Business Analyst Jill Schlesinger.

The Fed is expected to once again increase a key benchmark rate during a meeting on February 1st in an attempt to lower inflation from the current rate of 6.5% to just 2%.

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