Annual inflation in the United States cooled last month yet remained elevated in the latest sign that the pandemic-fueled price surge is only gradually and fitfully coming under control.
Tuesday’s report from the Labor Department showed that the consumer price index rose 0.3% from December to January, up from a 0.2% increase the previous month. Compared with a year ago, prices are up 3.1%.
That is less than the 3.4% figure in December and far below the 9.1% inflation peak in mid-2022. Yet the latest reading is still well above the Federal Reserve’s 2% target level at a time when public frustration with inflation has become a pivotal issue in President Joe Biden’s bid for re-election.
Excluding the volatile food and energy categories, so-called core prices climbed 0.4% last month, up from 0.3% in December and 3.9% over the past 12 months. Core inflation is watched especially closely because it typically provides a better read of where inflation is likely headed. The annual figure is the same as it was in December.
Biden administration officials note that inflation has plummeted since pandemic-related supply disruptions and significant government aid sent it soaring three years ago. And a raft of forward-looking data suggests that inflation will continue to cool.
Still, even as it nears the Fed’s target level, many Americans remain exasperated that average prices are still about 19% higher than they were when Biden took office.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
WASHINGTON (AP) — Inflation may have fallen below a 3% annual rate last month, which would be the lowest level in nearly three years and a potentially significant milestone as the Biden administration seeks to bolster Americans’ views of the economy before the November elections.
Economists have estimated that when the government issues the latest consumer price index Tuesday, it will show that prices rose just 0.2% from December to January for a third month in a row, according to forecasts compiled by data provider FactSet. Falling gas prices are expected to have slowed overall inflation.
And compared with a year earlier, inflation is thought to have cooled to 2.9%, down sharply from 3.4% in December. That would be the lowest year-over-year inflation figure since March 2021, when prices began spiking as a result of pandemic-related supply disruptions and higher consumer spending fueled by stimulus checks.
A decline in…