US consumer price inflation slowed less than forecast in January on stubborn gains in energy and shelter, a sign the Federal Reserve is likely to keep hiking its target rate to rein in price gains.
The consumer price index (CPI) — which tracks prices of a basket of finished products and services — rose in January by 6.4pc from a year earlier, down from 6.5pc in December, the Bureau of Labor Statistics said today. The January increase compared with analysts' estimates of about a 6.2pc gain. Still, it was the slowest annual gain since October 2021.
So-called core inflation, which strips out more volatile energy and food costs, rose at a 5.6pc annual pace, down from the prior month's 5.7pc increase.
The slightly higher than forecast gain in consumer prices suggests the Fed is almost certain to hike its target rate by a quarter point at its next policy meeting in March, with another hike in May also possible. The Fed has increased its target rate to a range of 4.5-4.75pc from near zero since March 2022 and has signaled it will continue to hike its target rate, although at a diminishing pace, until inflation is again on course to meet its long-term target of about 2pc.
Compared with the prior month, the CPI rose by 0.5pc in January on a seasonally adjusted basis, compared with a 0.1pc gain in December, but well off the cyclical peak of 1.3pc last June.
Core CPI rose by a monthly 0.4pc in January, matching the prior month's gain. The core goods index rose by 0.1pc from the prior month, while services excluding energy services rose by 0.5pc after a 0.6pc gain in December.
In the 12 months through January, the food index increased by 10.1pc, slowing from 10.4pc in December, while the shelter index rose by 7.9pc, accelerating from 7.5pc in December.
The energy index rose in January by 2pc from the prior month after a 3.1pc monthly decrease in December. The shelter index rose by 0.7pc from the prior month after a 0.8pc monthly gain in December.
Over the 12-month period, the energy index increased by 8.7pc in January after a 7.3pc gain the prior month. The gasoline index increased by 1.5pc from a year earlier after a 1.5pc decline in December, and the fuel oil index rose on the year by 27.7pc after a 41.5pc gain in December.
