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Inflation in the US rose to 3% year-on-year in January 2024, the fourth consecutive month of acceleration. This is contrary to analysts’ forecasts, who expected a slowdown in price growth, AFP reports, citing data from the US Department of Labor.
According to published data from the Consumer Price Index (CPI), prices rose by 3% between January 2023 and January 2024, after 2.9% in December. Market expectations were for a decline to 2.8%.
Rising prices and the Fed’s response
In addition to headline inflation, core inflation (excluding energy and food prices) accelerated, reaching 3.3% year-on-year. Car insurance, entertainment services, medical care, airline tickets, and communication services were the most expensive items.
These data may force the US Federal Reserve to maintain a cautious approach and take its time in cutting the key interest rate. The main indicator that the Fed is guided by, the PCE index, rose to 2.6% in December, while the regulator’s goal is to bring inflation back to 2%.
Political pressure on the Fed
US President Donald Trump, who has been actively advocating for lower interest rates to stimulate the economy, has called on the Fed to act. “Interest rates need to be lowered,” Trump wrote on Truth Social shortly before the publication of the new report.
