US consumer prices rose 3.1% in January… Expectation of early interest rate cut ↓

US consumer prices rose 3.1% in January…  Expectation of early interest rate cut ↓

The U.S. consumer price increase rate in January slowed to the low 3% range compared to the same month last year.

There were expectations in the market that the consumer price inflation rate in January would fall to the 2% range, but rising housing costs pushed up the inflation rate.

The U.S. Department of Labor announced on the 13th (local time) that the Consumer Price Index (CPI) in January rose 3.1% compared to the same month last year.

Compared to the consumer price increase rate of 3.4% in December last year, the rate of increase slowed by 0.3 percentage points. However, it exceeded the expert estimate of 2.9% compiled by the Wall Street Journal (WSJ). As inflation pressure continues, expectations for an early interest rate cut by the U.S. Federal Reserve are expected to subside.

The U.S. consumer price inflation rate peaked at 9.1% in June 2022 and then gradually declined, reaching a 3.0% increase in June last year. It rose again to 3.7% on August and 9th of last year, then fell again, continuing to fluctuate in the low to mid-3% range.

Compared to the previous month, it rose 0.3%, rebounding from the 0.2% increase in December last year and also exceeding experts’ expectations of 0.2%.

Core CPI, excluding highly volatile energy and food, also rose 3.9% compared to the same month last year, the same as the increase rate in December last year. However, it also exceeded experts’ expectations of 3.7%. It also rose 0.4% compared to the previous month, exceeding experts’ expectations of 0.3%. Core CPI is an indicator that the Federal Reserve pays relatively close attention to when determining the direction of monetary policy because it shows the basic trend of prices.

The Ministry of Labor explained that housing costs rose 0.6% compared to the previous month, contributing to two-thirds of the CPI increase in January. Housing costs account for 35% of the CPI weight and have a significant impact on the CPI calculation.

The U.S. Federal Reserve announced at the Federal Open Market Committee (FOMC) meeting on the 31st of last month that it would maintain the base interest rate at 5.25-5.50%. This is the fourth consecutive freeze on the base interest rate following September, November, and December.

At a press conference after announcing the interest rate freeze, Federal Reserve Chairman Jerome Powell said that the likelihood of a rate cut in March was not high.

“As a result of this meeting, I don’t think we’ll have the confidence to cut interest rates at the March meeting,” Powell said. “I don’t think March is very likely.” He continued, “Inflation may persist further. “We will continue to look at risks, and we will also watch the labor market,” he said, emphasizing that “a signal is needed that inflation is really low.”

Washington = Correspondent Park Young-jun [email protected]

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