An inflation gauge favored by the Federal Reserve increased in January, the Associated Press reports; it’s the latest sign that the slowdown in U.S. consumer price increases is occurring unevenly from month to month.
The government reported today that prices rose 0.3% from December to January, up from 0.1% in the previous month. In a more encouraging sign, however, prices were up just 2.4% from a year earlier, down from a 2.6% annual pace in December and the smallest such increase in nearly three years.
Excluding volatile food and energy costs, prices rose 0.4% from December to January, up from 0.1% in the previous month. Compared with a year earlier, such so-called “core” prices rose 2.8%, down from 2.9% in December. Economists consider core prices a better gauge of the likely path of future inflation.
Some of January’s inflation reflects the fact that companies often raise prices in the first two months of the year, leaving January and February price data high compared with the rest of the year. The costs of hospital and doctors’ services are also rising, however, to offset the sizable pay raises commanded by nurses and other in-demand health care workers.
That trend could help keep inflation elevated in the coming months, but by early spring, most analysts expect prices to settle back to the milder pace of increases that occurred in the second half of 2023, when inflation eased to a 2% annual rate.
