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US inflation slows as price pressures gradually ease

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WASHINGTON — Annual U.S. inflation slowed last month but remained high, the latest sign that the pandemic-fueled price surge is gradually and intermittently under control.

The report released by the Labor Ministry on Tuesday showed that the consumer price index rose 0.3% between December and January, compared to a 0.2% increase the previous month. Compared to last year, prices increased by 3.1%.

This is lower than December’s figure of 3.4% and well below the inflation peak of 9.1% reached in mid-2022.

The latest figure is well above the Federal Reserve’s 2% target, at a time when public frustration with inflation has become a central issue in President Joe Biden’s re-election bid.

Excluding the volatile food and energy categories, so-called core prices rose 0.4% last month, compared with 0.3% in December and 3.9% over the past 12 months. Core inflation is closely monitored because it generally provides a better idea of ​​the likely direction of inflation. The annual figure is the same as in December.

Biden administration officials note that inflation has fallen since pandemic-related supply disruptions and large government aid sent it soaring three years ago. And a series of forward-looking data suggests that inflation will continue to cool.

Yet even as the price moves closer to the Fed’s target level, many Americans remain exasperated that average prices are still about 19% higher than they were when Biden took office.

The mixed data released Tuesday could increase caution among Fed officials, who said they were pleased with progress in sharply reducing inflation but want to see additional evidence before being sure the Fed is sustainably returning to its target. 2% target. Most economists think the central bank will have to wait until May or June to start cutting its benchmark rate from its 22-year high of around 5.4.

The Fed raised its key rate 11 times between March 2022 and July last year as part of a concerted effort to defeat high inflation. The result has been much higher borrowing rates for businesses and consumers, particularly for mortgages and auto loans. Rate cuts, when they occur, would ultimately lead to lower borrowing costs for many loan categories.

In the last three months of last year, the economy grew at a surprisingly rapid annual rate of 3.3%. There are signs that growth remains healthy so far in 2024. Companies went on a hiring spree last month. Surveys of manufacturing companies found that new orders increased in January. And service companies reported an uptick in sales.

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