Consumer prices: Inflation in the USA continues to fall

Consumer prices: Inflation in the USA continues to fall

The inflation in the USA fell in January. Consumer prices rose by 3.1 percent in January compared to the same month last year, after 3.4 percent in December. This was announced by the Department of Labor in Washington. However, experts had expected a sharper decline to 2.9 percent.

Higher inflation rates reduce the purchasing power of consumers. You can then afford it for one dollar less. The burden on people caused by inflation was comparatively high last year. They were in December Consumer prices rose 3.4 percent. That was more than most analysts expected. The development of inflation is therefore an important factor for the further interest rate policy of the US Federal Reserve Bank.

Hopes for interest rate cuts are diminishing

Inflation had moderated at the start of the year. This had previously fueled expectations that the Fed would consider interest rate cuts in the coming months. However, the new data could noticeably slow down hopes of an early reduction.

The Fed wants to sustainably control the inflation rate towards its target value of 2.0 percent. According to Fed Chairman Jerome Powell, it made progress. But they want to see more “good data” that point in this direction on the way to a turnaround in interest rates.

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