WASHINGTON — Annual inflation in the United States remains high, but Joe Biden’s government claims it is slowing, a statement that contrasts with the very high prices that American consumers continue to pay.
Excluding the volatile food and energy categories, so-called core prices rose 0.4% last month, up from 0.3% in December and 3.9% over the past 12 months.
Core price inflation is watched closely because it often provides a clearer picture of the likely direction of inflation. The annual figure is the same as in December.
The report released Tuesday by the Labor Department showed that the consumer price index rose 0.3% from December to January, an increase from the previous month’s 0.2% increase. Compared to last year, prices increased by 3.1%.
The figure given by the government is lower than the 3.4% in December, and well below the inflation peak of 9.1% in mid-2022. However, it is well above the Federal Reserve’s target of 2 % at a time when public frustration with inflation has become a key issue in the election campaign.
Americans see no price reduction
Government officials note that inflation has fallen since pandemic-related supply disruptions and large amounts of government aid caused it to rise three years ago. However, high prices remain and others have continued their rise.
Most Americans remain exasperated that average prices are still 19% higher than the year President Joe Biden took office. In some sectors such as food the figure exceeds 30%.
The mixed data released Tuesday could reinforce the caution of Federal Reserve officials, who “say they are pleased” with the reduction in inflation but want to see more evidence before trusting it to move sustainably toward the target. 2%. Most economists think the central bank will want to wait until May or June to start reducing its benchmark rate of 5.4, the highest in 22 years.
High rates make credit more expensive and thus discourage consumption and investment, thus lowering the pressure on prices.
Rates are now at their highest levels in more than two years, at levels of 5.25-5.50%, and the expectation of the market and the Fed itself is to begin cutting them this year.
The government is trying to convince Americans that price increases are contained. However, the gradual moderation of inflation does not translate to supermarket shelves or services such as insurance, restaurants, hotels, etc.
Wall Street reacted negatively to the CPI data and posted heavy losses after Tuesday’s open.
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Source: With information from AP and AFP.
