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Business News/ Economy / US consumer inflation reduces to 3.1% in January
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US consumer inflation reduces to 3.1% in January

US consumer inflation reduces to 3.1% in January

US consumer inflation reduced from 3.4% to 3.1% in January 2024Premium
US consumer inflation reduced from 3.4% to 3.1% in January 2024

U.S. consumer prices rose beyond anticipated levels in January, primarily driven by rising in shelter and healthcare expenses. However, despite this acceleration in inflation, it is unlikely to alter the prevailing expectations regarding the Federal Reserve's plans to initiate interest rate reductions in the first half of this year.

According to the Labor Department's Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 3.1 percent from a year ago in January, down from 3.4 percent in December. The annual revisions to the CPI data, released last Friday, presented a mixed picture, indicating a general downward trajectory in inflation following its surge in 2022.

Also read: Inflation is cooling but RBI has no reason to cut rates before June, say experts

The stability of the measure excluding food and energy costs, despite predictions of a decline, underscores the uncertainty surrounding efforts to curb inflation. The latest report from the Labor Department indicates that the "core" CPI, which excludes volatile elements, remained at 3.9 percent year-on-year, mirroring the December figure.

Over the period from December to January, overall inflation saw a modest increase of 0.3 percent, marking an acceleration from the previous month's figure from November to December.

"The index for shelter continued to rise in January, increasing 0.6 percent and contributing over two thirds of the monthly all items increase," said the Labor Department in its report.

The Bureau of Labor Statistics (BLS) has recently revised the seasonal factors, adjusting the model utilized to mitigate seasonal variations within the data. These modifications included increased weight assigned to the housing sector while decreasing the weight for new and used cars, influencing the calculation of January's Consumer Price Index (CPI).

Also read: Urban unemployment rate drops in Oct-Dec

This adjustment may contribute to the unexpectedly robust readings observed, which economists suggest are likely transient in nature.

The food index experienced a rise during the month, despite a decline in energy costs attributed to lower gas prices. In response to an inflation surge, the US Federal Reserve implemented swift interest rate hikes throughout 2022.

Currently, the Fed is maintaining interest rates at their highest level in over two decades, with the objective of gradually returning inflation to the targeted two percent rate over the long term.

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Published: 13 Feb 2024, 07:32 PM IST
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