The US Consumer Price Inflation (CPI) rose 0.5 per cent in January, US Labour department data showed on Tuesday. This is the smallest annual rise in consumer prices in the US, indicating a continued slowdown in inflation.
The present trend is expected to keep the US Federal Reserve on its moderate rate hiking trajectory. The 0.5 per cent hike in CPI last month follows a 0.1 per cent rise in December, the Labour Department said on Tuesday. In its report, the department’s Bureau of Labour Statistics said that increasing housing prices accounted for about half of the monthly rise.
Notably, a new method was employed to calculate the CPI data for January wherein the spending weights used to calculate the inflation data was updated to yearly weights. In the new system, housing costs’ share of the CPI has been raised, but the weightage for transportation and food prices were lowered.
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In the year-to-date period till January 2023, the CPI increased 6.4 per cent, which was the lowest gain since October 2021. The annual CPI had peaked in June 2022 at 9.1 per cent which became a historic high since November 1981.
A separate report by the Bureau of Labour Statistics showed that rising consumer prices meant a loss in real wage for workers. While average hourly earnings fell 0.2 per cent in January, it indicated a 1.8 per cent fall from the year-ago period.
In response to the inflation data, while global stocks gained, the US dollar fell. Experts expect the US Federal Reserve to raise lending rates at least twice more in the coming months.
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