US consumer inflation drops to 3.1%, remains constant in January

By Sneha Sengupta • Published on February 13, 2024 at 9:09 PM IST

2 min read

In January, U.S. consumer prices increased more than expected, mostly due to increases in housing and medical costs. But even with this spike in inflation, it is unlikely to change the general consensus about the Federal Reserve’s intentions to begin lowering interest rates in the first half of this year.

The Consumer Price Index (CPI) increased by 0.3 percent last month, according to the Labor Department’s Bureau of Labor Statistics. This comes after an increase of 0.2 percent in December. The annual revisions to the CPI figures, which were made public last Friday, painted a mixed picture of inflation’s general downward track after its 2022 jump.

The measure’s stability, which does not include food and energy expenses, highlights the unpredictability of attempts to control inflation.

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

The seasonal components have been updated by the Bureau of Labor Statistics (BLS), which also modified the model that was used to reduce seasonal changes in the data. The Consumer Price Index (CPI) for January was affected by these changes, which included giving the housing sector more weight and giving new and used cars less weight.

Throughout 2022, the US Federal Reserve quickly raised interest rates in reaction to a spike in inflation.

Throughout the month, the food index increased even though energy expenses decreased due to lower gas prices.

With the intention of gradually bringing inflation back to the long-term target rate of two percent, the Fed is currently keeping interest rates at their highest point in more than 20 years.

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