WASHINGTON. Annual inflation in the United States fell last month but remained high, in the latest sign that pandemic-driven price increases are being brought under control, albeit gradually and unevenly.
The report released Tuesday by the Labor Department showed that the consumer price index rose 0.3% from December to January, an increase from the previous month’s 0.2% increase. Compared to last year, prices increased by 3.1%.
This figure is down from 3.4% in December, and is well below the inflation peak of 9.1% in mid-2022. However, it is well above the Federal Reserve’s target of 2%, in a time when public frustration with inflation has become a central issue in President Joe Biden’s campaign for re-election.
Excluding the volatile food and energy categories, so-called core prices rose 0.4% last month, up from 0.3% in December and 3.9% over the past 12 months. Core price inflation is watched closely because it often provides a clearer picture of the likely direction of inflation. The annual figure is the same as in December.
Inflation in the US would continue to fall
Government officials note that inflation has fallen since pandemic-related supply disruptions and large amounts of government aid caused it to rise three years ago. And many forecasts indicate that inflation will continue to fall.
Still, even as it approaches the Federal Reserve’s target, many Americans remain exasperated that average prices are still 19% higher than the year President Joe Biden took office.
The mixed data released Tuesday could reinforce caution among Federal Reserve officials, who have said they are pleased with the progress in lowering inflation sharply but want to see more evidence before trusting it is headed sustainably until the 2% target. Most economists think the central bank will want to wait until May or June to start cutting its benchmark rate of 5.4, the highest in 22 years.
In the final three months of last year, the economy grew at an unexpectedly fast pace of 3.3% annually. There are signs that growth remains healthy so far in 2024. Companies made a large number of hires last month. Surveys among manufacturers found that new orders increased in January. And service companies reported an increase in their sales.
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