Alternative data flags sharp US inflation cooling

Alternative inflation data shows US price pressures cooling sharply, a shift that could reshape expectations for Federal Reserve policy and support risk assets including cryptocurrencies.

The signal comes after the Federal Reserve paused rate cuts last week and offered no clear guidance on near-term easing, despite signs inflation may be falling faster than official data suggest.

Truflation data showed its US Consumer Price Index at 0.86% year on year as of Sunday, down from 1.24% a day earlier, while its core PCE reading stood at 1.38%, below the Fed’s 2% target.

“All our indexes are calculated daily as a year-over-year percentage rate, using millions of data points from tens of data providers,”

Truflation said in a statement.

The readings contrast sharply with government figures, which put headline CPI at 2.7% in December and core PCE at 2.8% in November.

Lower inflation and potential rate cuts are widely seen as negative for the US dollar but supportive for risk assets such as Bitcoin and the broader digital asset market.

Macro investor Raoul Pal of Real Vision has argued a weaker dollar helps ease global financial conditions, particularly in a system heavily reliant on dollar-denominated debt.