US Inflation Slows By Less Than Expected

Price increases in the US moderated last month but not as much as expected, as higher housing and food costs offset a decline in petrol prices.

Annual inflation, the pace at which prices rise, was 3.1%, down from 3.4% a month earlier, the Labor Department said.

Many analysts had expected inflation to fall to 2.9%.

It is the latest economic reading to suggest that authorities have not got inflation fully under control.

Financial markets in the US opened lower after the report, which dashed any remaining hopes that progress taming the problem might convince the US central bank to cut rates early this year.

“It looks like everything is running hotter than hoped for,” said Neil Birrell, chief investment officer at Premier Miton Investors. “We are not at the stage of worrying about inflation reaccelerating, but we are not out of the woods yet either.”

Inflation – which measures the pace at which prices are rising – in the US took off in 2021 as a booming post-pandemic economy created shortages of supplies and strong demand, spurring many firms to put up prices.

It spiked above 9.1% in June 2022, as oil prices surged on the back of the war in Ukraine.

Since 2022, many supply issues have healed and demand has moderated, responding in part to the sharp rise in borrowing costs announced by the Federal Reserve.

But price increases have continued to percolate through, especially for services.

The ongoing price rises have hit incomes and helped to fuel dissatisfaction among voters ahead of the country’s presidential election in November.

BBC