Government records show that prices rose 0.3% from December to January, a slight improvement from the previous month’s 0.1% increase. The annual rate of increase was 2.4%, an improvement above December’s 2.6% and the lowest rate of increase in over three years.
An inflation measure favored by the Federal Reserve rose in January, providing further evidence that the reduction in consumer price increases in the US is occurring unevenly from month to month.
President Joe Biden’s reelection campaign is benefiting from inflation falling short of predictions. Average incomes have risen faster than inflation over the past year, but many Americans are still dissatisfied with the level of prices compared to when the inflation bubble burst three years ago. Many polls show that the public shares this stance, which could hurt Biden’s re-election chances.
The Fed’s preferred inflation indicator showed a slow but steady fall in price levels last year, following a peak of 7.1% in the summer of 2022. The cost of raw materials and parts has decreased due to the supply chain’s increased efficiency. Additionally, firms have discovered it is more accessible to control salary increases due to the continual influx of job searchers, which has helped curb inflation. Inflation remains over the central bank’s yearly objective of 2%.
After adjusting for fluctuations in energy and food prices, the annual percentage increase from December to January jumped from 0.1% to 0.4%. In addition to a 2.9% increase in December, these so-called “core” prices rose 2.8% annually. Economists consider core prices a more trustworthy sign of the direction of future inflation.
Many companies raise prices in January and February, causing relatively high pricing data compared to the rest of the year, contributing to January’s inflation. Medical service costs increase with the significant wage increases that nurses and other highly sought-after healthcare workers demand.
The current trend suggests that inflation could stay high for some time. According to most analysts’ estimates for early spring, prices will resume their more moderate growth rate observed in the second half of 2023, when inflation fell to 2% per annum.
