Shelter and food costs rose in January, offsetting a drop in gas prices. (iStock)
Inflation rose again in January due to continued increases in prices for food, housing and other services, according to the report. consumer price index (CPI) Published by the Bureau of Labor Statistics (BLS).
On an annual basis, prices rose 3.1% in January, slower than the previous month’s 3.4% rise but higher than economists had expected for growth of less than 3%. On a monthly basis, in January he rose 0.3 points, after rising 0.2 points in the previous month. Core inflation, which excludes more volatile food and energy prices, rose 0.4 percentage points, slightly higher than the 0.3 percentage point rise in the previous month. On an annual basis, core CPI increased by 3.9%.
Shelter costs continue to be a significant exemption from consumer spending, contributing more than two-thirds of the monthly increase. Food prices also rose by 0.4 percentage points in January, but this was offset by a 0.9 percentage point decline in energy prices, mainly due to lower gasoline prices since December’s CPI.
Inflation has remained above 3% in recent months, according to the January CPI reading, and core inflation appears to be stabilizing at an even higher level, with the US Federal Reserve’s The rate cut schedule is becoming more uncertain.
The Fed expects to cut interest rates several times this year, but has not yet set a timeline for how quickly or to what extent. That will depend on how quickly inflation approaches its 2% target rate, or whether the Fed senses the U.S. economy is headed toward a recession. Fed officials expect at least three rate cuts this year, with the central bank saying rates are expected to fall to 4.6%. Latest economic forecasts In its Summary of Economic Projections (SEP) it said:
Kayla Bruun, senior economist at Morning Consult, said in a statement: “Today’s tougher-than-expected inflation numbers highlight the persistent upside risks that continue to permeate the U.S. economy, and we believe our 2% inflation target remains strong. “This potentially challenges the Fed’s ability to achieve and maintain its goals.” .
If you’re struggling with high inflation, you might consider taking out a personal loan to pay off your debt at a lower interest rate and reduce your monthly payments. Visit Credible to find an interest rate that’s right for you without affecting your credit score.
Buy a home in these states to get student loan debt relief
Rising interest rates won’t be enough for spring home purchases
The chances of a rate cut in time for the spring home buying season have faded. Daniel Hale, chief economist at Realtor.com, said January’s inflation numbers are likely to confirm the Fed’s wait-and-see stance. The longer the Fed waits to cut interest rates, the longer it will take for mortgage rates to fall significantly.
Mortgage interest rates have remained steady in the mid-6% range, after falling by more than 1 percentage point since late October. This reduction has made purchasing more affordable for some buyers, but further reductions will help open the market to more buyers.
“For the housing market, today’s data means mortgage rates are likely to remain in the narrow range they have been in since late December, but are likely to trend toward the upper end of that range,” Hale said in a statement. ” he said. “The welcome stabilization in interest rates in recent weeks provides some reassurance to homebuyers and contrasts with volatility in 2023, which should support increased home sales.”
Even if you’re looking to become a homeowner, shopping around can help you find the best mortgage rates. Visit Credible to compare options without affecting your credit score.
Many Americans are preparing for a recession despite signs of recession: Survey
Interest rate cuts won’t happen until the end of the year
Strong economic data and persistent inflation give the Fed more room to wait, with investors increasingly looking beyond March to the Fed’s next May meeting as the starting point for rate cuts. It has become.
“Although rents are softening, prices remain high, which is keeping the economy balanced for a so-called soft landing,” said Thelma Hepp, chief economist at CoreLogic. “Overall, the domestic economy remains strong, so we don’t expect a half-year rate cut this year unless prices take a deeper downward trajectory.”
Jim Baird said that when the Fed starts cutting interest rates, and how much, it depends on other expectations: a gradual moderation in growth, further easing of labor market conditions; It said this would depend on whether more convincing evidence that inflation had eased significantly was achieved. Chief Investment Officer of Plante Moran Financial Advisors.
“While a reacceleration of inflation may not cause the Fed to reverse course and raise interest rates further, it could avoid expected rate cuts,” Baird said in a statement. “Inflation remains a risk of focus for the Fed.
“Policymakers fear that cutting rates too soon will reignite inflation, forcing policy changes and further tightening, undermining credibility in the process,” Baird said. continued. “Another risk that cannot be overlooked is that policymakers keep interest rates too tight for too long, eventually overcoming inflation, but pushing the economy into recession in the process.”
If you’re interested in paying off high-interest debt with a personal loan, visit the Credible Marketplace to learn more about your options and speak to an expert to get your questions answered.
College tuition payment plans could put students at risk: CFPB
Have a finance-related question but don’t know who to ask? Email it to your trusted money expert. Moneyexpert@credible.com Your questions may be answered in Credible’s Money Expert column.
