Us Inflation Down During January

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Us Inflation Down During January

US Inflation Down To 3.1% During January

The deceleration trend seen in the US inflation continues even during January 2024. According to the latest data, the annual inflation reading in the country was 3.1% during January.

The decline in US inflation was slower than the projections made by the economists. The inflation reading for January will play a key role in how the Federal Reserve approaches the rate cut prospects.

According to economists, inflation was expected to go from 3.4% the previous month to around 2.9% in January. However, the actual reading was 3.1%, with a difference of +0.2%.

M/M Inflation Jumped To 0.3%

The inflation reading on an M/M basis showed a jump from 0.2% to 0.3%, primarily due to the higher rent costs in the country. If we look at the inflation M/M forecasts, they were expected to remain unchanged.

And if we look at inflation without volatile items like fuel and food, it remained the same as seen during December. This data shows that most of the inflation's strength comes from these volatile items.

The Fed has already clarified that it needs more evidence that inflation is progressing toward the 2% target. Only once they have enough proof will the move towards rate cuts start. When writing this, the borrowing costs in the USA are still at multi-decade highs.

As per the Fed Watch Tool, the chances of a March rate cut are now only 15.5%, while it was around 75% just a month ago.

Amidst all of this, Powell is still optimistic that the US economy is on the path to a soft landing despite the high interest rate and slow economic growth. He said the labour market is still vital to add credence to this scenario.

Now that January's inflation reading is out, the focus will be on the comments from the Fed officials regarding the next course of action.

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