Current:Home > ScamsInflation eased again in January – but there's a cautionary sign-VaTradeCoin
Inflation eased again in January – but there's a cautionary sign
View Date:2025-01-08 15:44:16
Inflation cooled in January for the seventh month in a row.
But there's a cautionary sign: While the 12-month price increase was slightly lower, prices surged between December and January, suggesting inflation is still far from tamed.
Consumer prices last month were 6.4% higher than a year ago, according to a report from the Labor Department Tuesday. That's the lowest annual inflation reading since October 2021.
However, prices rose 0.5 between December and January — the fastest one-month gain since October of last year.
The recent spike in prices suggests that inflation may have more staying power than financial markets have anticipated.
"There's been an expectation that it will go away quickly and painlessly, and I don't think that's at all guaranteed," Federal Reserve chairman Jerome Powell said last week. "The base case for me is that it will take some time and we'll have to do more rate increases and then have to look around and see if we've done enough."
The Federal Reserve has already raised interest rates by 4.5 percentage points since last March in an effort to curb inflation. Fed policymakers have hinted at two more rate hikes, totaling 0.5 percentage points, in the coming months.
"We expect 2023 to be a year of significant declines in inflation and it's actually our job to make sure that that's the case," Powell said, in an appearance before the Economic Club of Washington. But he cautioned it would likely be 2024 before inflation returns to the Fed's target rate of 2%.
Gas prices are rising - and used cars could be next
The rise in the consumer price index between December and January was fueled by higher costs for shelter, food, and gasoline.
Excluding volatile food and energy prices, "core inflation" was 0.4% for the month — unchanged from December.
Gas prices have dropped during the first two weeks of February, but AAA warns that drivers can't count on falling prices at the pump to keep inflation in check.
"We are entering the higher-priced spring and summer driving season, and so drivers should brace for that," said Devin Gladden of AAA. "It will likely be a volatile year given how much uncertainty remains around the economy."
Used car prices have also acted as a brake on inflation, falling 8.8% last year and another 1.9% in January. But signals from the wholesale market suggest used car prices could jump again in the coming months.
The Fed is also keeping a close eye on the price of services, such as haircuts and restaurant meals. Those prices are largely driven by labor costs, and are therefore less likely to come down than goods prices.
veryGood! (61491)
Related
- Chet Holmgren injury update: Oklahoma City Thunder star suffers hip fracture
- Censorship efforts at libraries continued to soar in 2023, according to a new report
- Review: Full of biceps and bullets, 'Love Lies Bleeding' will be your sexy noir obsession
- Paul Alexander, Who Spent 70 Years in an Iron Lung, Dead at 78
- MLS playoff teams set: Road to MLS Cup continues with conference semifinals
- Utah prison discriminated against transgender woman, Department of Justice finds
- '1 in 400 million': Rare cow with two heads, four eyes born at a farm in Louisiana
- Paul Alexander, Who Spent 70 Years in an Iron Lung, Dead at 78
- Mark Zuckerberg Records NSFW Song Get Low for Priscilla Chan on Anniversary
- Yankees ace Gerrit Cole out until at least May, will undergo more elbow exams
Ranking
- Summer I Turned Pretty's Gavin Casalegno Marries Girlfriend Cheyanne Casalegno
- Christina Applegate Says She Was Living With Multiple Sclerosis Symptoms for 7 Years Before Diagnosis
- South Dakota prosecutors to seek death penalty for man charged with killing deputy during a pursuit
- Michigan State's basketball maverick: How Tom Izzo has prospered on his terms for 30 years
- Democrat Janelle Bynum flips Oregon’s 5th District, will be state’s first Black member of Congress
- RHONY's Brynn Whitfield Shares Hacks To Look Good Naked, Get Rid of Cellulite & Repair Hair Damage
- Texas man who used an iron lung for decades after contracting polio as a child dies at 78
- Going abroad? Time to check if you're up to date on measles immunity, CDC says
Recommendation
-
Minnesota man is free after 16 years in prison for murder that prosecutors say he didn’t commit
-
Get free treats, discounts if you solve the 1,000th Wordle puzzle this week
-
Best Box Hair Dyes to Try This Spring: Get the Hair Color You Want at Home
-
Some Alabama websites hit by ‘denial-of-service’ computer attack
-
What does the top five look like and other questions facing the College Football Playoff committee
-
The 8 Best Luxury Pillows That Are Editor-Approved and Actually Worth the Investment
-
Kentucky should reconsider using psychedelics to treat opioid addiction, attorney general says
-
Why Arnold Schwarzenegger's Son Joseph Baena Doesn't Use His Dad's Last Name