U.S. inflation likely slowed again last month in the latest sign that consumer price increases are becoming less of a burden on America’s households.
Cashiers process purchases at a Walmart Supercenter in North Bergen, N.J., on Thursday, Feb. 9, 2023. On Tuesday, the Labor Department reports on U.S. consumer prices for January. The consumer price index is closely watched by the Federal Reserve, which has raised interest rates eight times in the past year in an attempt to cool the economy and bring down inflation. last month in the latest sign that consumer price increases are becoming less of a burden on America's households.
Average gasoline prices, which had declined in five of the past six months through December, likely rose about 3.5% in January, according to an estimate from Nationwide. Food prices are also expected to have risen, though more slowly than the huge spikes of last summer and fall. Goods have become less expensive because supply chain snarls that had inflated prices after the pandemic erupted in 2020 have unraveled. And Americans are shifting much of their spending toward services, after having splurged on items like furniture and exercise equipment during the pandemic.
A key question for the economy this year is whether unemployment would have to rise significantly to achieve that slowdown in wage growth. Powell and other Fed officials have said that curbing high inflation would require some “pain” for workers. Higher unemployment typically reduces pressure on businesses to pay bigger wages and salaries.
Other Fed officials, speaking last week, stressed their belief that more interest rate increases are on the way. The Fed foresees two more quarter-point rate hikes, at its March and May meetings. Those increases would raise its benchmark rate to a range of 5% to 5.25%, the highest level in 15 years.
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