January US Consumer Inflation Moderated, but Fell Short of Expectations

Americans received a bit of relief from inflation hikes in January, although the decrease was less than expected. The Consumer Price Index (CPI) for the first measure of 2024 showed that prices rose by 3.1% for the 12 months ended in January, according to Bureau of Labor Statistics data released Tuesday. This marks a step back from December’s 3.4% rate and a dramatic cooling from the 6.4% increase seen in January 2023.

On a monthly basis, CPI rose by 0.3%, with stubbornly high shelter costs accounting for two-thirds of the gain, according to the BLS. While gas prices fell, food prices (which thankfully are no longer outpacing overall inflation) rose at their highest monthly rate in a year. Consumers got some relief from falling gas prices; however, food prices moved in the wrong direction for many Americans as they continued to rise steadily.

“Food prices kept going up, and that’s a real pain point,” Robert Frick, corporate economist with Navy Federal Credit Union, told CNN. “There’s the rate of inflation, which is coming down, then there’s the weight of inflation, which continues to mount. So even if you have 3%, that’s 3% on top of a mountain of inflation people are already carrying.” Economists were expecting inflation to ease to 0.2% from December and slow to an annual rate of 2.9%, according to FactSet consensus estimates.

Overall inflation has risen at an average annual rate of 3% or higher for over three years now – the longest streak since the late 1980s and early 1990s. “Of course [3%] is an arbitrary measure,” said Frick, “but that’s how humans think about it.” Annual price increases surged post-pandemic and peaked at an unprecedented level of 9

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