The price increase caused by the epidemic is progressively being controlled as annual inflation in the US calmed down but was still high last month.
According to data released by the Labor Department, the consumer price index increased 0.3% between December and January, after a 0.2% gain in the prior month. There was a 3.1% increase in price from a year earlier. This is much lower than December’s 3.4% and the 9.1% high in the middle of 2022. A key concern in President Joe Biden’s re-election campaign is that the most recent measurement is still far higher than the Federal Reserve’s 2% goal level.
Most experts believe that the central bank will choose to hold off on reducing its benchmark rate from its 22-year high of around 5.4 until May or June. To combat excessive inflation, the Federal Reserve hiked its benchmark rate eleven times between March 2022 and July of last year. Businesses and individuals alike have seen significantly increased borrowing rates, particularly for significant loans like mortgages and car loans. Sooner or later, many types of loans would have cheaper borrowing rates due to rate reduction.
After increasing by 0.3% in December and 3.9% in the previous twelve months, core prices rose 0.4% last month. There has been no change to the yearly total since December. Inflation has fallen sharply since it surged three years ago due to supply interruptions caused by the epidemic and substantial government assistance, according to officials in the Biden administration. A deluge of projections indicates that inflation will keep falling.
According to Fed Chair Jerome Powell, most of the inflation reduction so far has been due to falling prices for products, such as used automobiles, furniture, and appliances, which have decreased in six out of the last seven months. On the other hand, service prices continue to climb sharply and include things like medical treatment, automotive repairs, hotel stays, and live entertainment. If the Federal Reserve wants to be confident that inflation is going down, it will want to see service costs decrease.
