The forecast that inflation would fall to 2.9% in the United States, a level not achieved since March 2021, caused new frustration. The consumer price index grew more than expected, 0.3% in January, and the annualized index remained at 3.1%, below the 3.4% in December, but without reaching the predicted cooling.
Analysts assumed that if inflation entered the range below 3%, less than one point from the 2% objective set by the Federal Reserve in its work to combat the rise in product prices, this would increase pressure to that the Fed began in March to cut interest rates, to their highest range in more than two decades (5.25-5.50%), from the almost zero that prevailed in March 2022.
Those responsible for the central bank showed their reluctance to this reduction schedule at the end of their January meeting due to the insistence of persistent inflation. Its president, Jerome Powell, accepted that there will be interest rate cuts this year, but stressed that March was a premature date. This report would only consolidate that position.
The proof that this expectation of a cut so long awaited by investors was frustrated is that the futures markets immediately fell 300 points (1.1%). The resistance of inflation was due to the fact that the high price of housing rentals weighs heavily on consumers' finances. In January it rose 0.6%, which contributed to two-thirds of the index's increase. In the twelve-month comparison, this price has increased by 6.1%.
The unmet forecast was for prices to rise a maximum of 0.2%, as happened in December. Excluding the most volatile prices, such as energy and food, core inflation accelerated by 0.4% in January and stood at 3.9%, above a growth outlook of 0.3% and an annualized high of 3.7%.
Despite the fact that the US economy is operating at full capacity, the good indicators of the Gross Domestic Product, a powerful labor market and the fall in inflation from the 9.1% it climbed to in June of 2022, citizen sentiment has only recently begun to rebound from negative records. This does not prevent consumption from continuing to be the key driver of economic flourishing. Despite the frustration over a “hotter” than expected January, this latest data only confirms the downward trend in inflation, experts stressed.
One of the elements that most influences this feeling, along with housing, is the cost of food, which in January rose 0.4% compared to the previous month (0.2% in December), although the decline continues in the annual calculation. Energy prices partially offset this increase with a fall of 0.9%, mainly due to a 3.3% reduction in gasoline prices.