In January, the total inflation was recorded at 3.1 percent, and core inflation stood at 3.9 percent.
The inflation of consumer prices in the United States decelerated in January.
According to the consumer price index released by the Ministry of Labor on Tuesday, inflation was at 3.1 percent, a decrease from December’s 3.4 percent.
In January, the inflation rate increased slightly more than anticipated as economists surveyed by Bloomberg predicted it to be 2.9 percent.
Compared to December, there was a 0.3 percent rise in prices.
In January, energy costs decreased by 4.6 percent year-on-year, but food prices rose by 2.6 percent, services by 5.4 percent, and housing by 6.0 percent.
The central bank and economists closely monitor core inflation, which was at 3.9 percent, maintaining the same rate as in December.
Core inflation is a significant indicator as it excludes the direct impact of fluctuating energy and food costs on consumer prices. It provides a more comprehensive view of inflation.
Heidi Schauman, the research director of financial company Danske Bank, comments, “As inflation gradually nears two percent, there’s growing uncertainty about its steady slowdown. We still anticipate that the central bank will reduce the key interest rate in March, but there’s a risk that the central bank might only lower the key interest rate later in the spring.”
Following the release of the inflation data, U.S. stocks dropped significantly, and the dollar strengthened as many investors anticipate that the central bank will lower the key interest rate after March. The S&P 500, the world’s most influential stock index, fell by 1.3 percent at 16:45 Finnish time.
To curb inflation, the central bank has tightened monetary policy 11 times in less than two years.
The central bank paused the tightening of monetary policy in June, but resumed it again in July. Since September, the policy rate has remained constant, ranging between 5.25-5.50 percent.
The fact that core inflation remained stable in January supports the evaluation that the central bank is unlikely to lower its key interest rate again in March.
The U.S. labor market remains tight, and wage pressures are relatively high.
Last week, the OECD, an organization of industrialized countries, projected that U.S. inflation would decelerate to 2.2 percent this year and 2.0 percent the following year.
The central bank aims for inflation to average two percent over a lengthy period for price stability.
Jan von Gerich, the chief analyst of financial company Nordea, states, “The latest inflation data support the central bank’s perspective that it’s worth waiting for more information about inflation’s development. It seems that the central bank will not lower the key interest rate until March.”
