For the second month in a row, the annual rate of growth in consumer prices has been lower than it was a year ago. This is the latest indication that the high inflation that has plagued the United States for over two years is beginning to abate.
Inflationary forces in the U.S. economy remain steadfast, as seen by Tuesday’s official consumer price data, and are expected to continue fueling price hikes for the rest of this year.
The year-over-year increase in consumer prices was 6.4% in January, down from December’s 6.5%. It was the fifth consecutive annual decline and far less than the 9.1% saw in June. Still, it’s far higher than the Federal Reserve’s goal inflation rate of 2% each year.
The 0.5% monthly increase in consumer prices saw from December to January was much larger than the 0.1% increase seen from November to December. Inflation increased in January due to generally higher prices across a variety of goods and services.
The Federal Reserve has been actively trying to rein in inflation by increasing its benchmark interest rate, which it has done during the past year to its highest level in 15 years. The Federal Reserve’s mission is to reduce economic activity by slowing borrowing and spending, reducing the rate of hiring, and easing the burden on many firms of having to increase pay in order to attract and retain people. Businesses often raise prices to cover the increased cost of labor, which contributes to inflation.