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    U.S. CPI Moderates in January, Core Inflation Remains High

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    The U.S. Consumer Price Index inflation rate moderated in January, yet remained higher than many economists had expected, driven by rising prices for housing, gasoline and natural gas.[0] According to the report from the Labor Department on Tuesday, the CPI rose 6.4% from a year earlier, down from 6.5% in December and the lowest annual inflation reading since October 2021.[1] The monthly increase was 0.5%, the fastest one-month gain since October of last year.[2]

    Core inflation, which strips out volatile food and energy prices, was at 5.6% in the year ending in January.[3] Prices for used cars, medical care and airplane tickets all fell month-to-month, however, used car prices have acted as a brake on inflation, falling 8.8% last year and another 1.9% in January.[4]

    The Federal Reserve has aggressively raised borrowing costs from near-zero to a target range of between 4.5% to 4.75% in less than a year, as the U.S. central bank aims to bring down soaring prices.[5] At its last policy meeting, the Federal Reserve (Fed), chaired by Jerome Powell, only raised interest rates by a smaller-than-expected 25 basis points. However, Powell has cautioned that rates may have to remain elevated for a longer period due to data indicating that the labor market remains strong.[5]

    In January 2021, India’s retail inflation rate rose to 6.52%, following two consecutive months below the 6% mark, due to a surge in consumer food prices that rose to 5.94% from 4.2% in December 2022. Additionally, prices of goods and services across the board also experienced an uptick.[6]

    According to the New York Fed's January 2023 Survey of Consumer Expectations, the median forecast for inflation over the next twelve months remained stable at 5%.[7] Americans anticipate inflation to be 2.7% in three years and 2.5% in five years, representing a decrease of 0.3 percentage points and an increase of 0.1 percentage points, respectively.[7]

    The Fed views the core rate as a more accurate predictor of future inflation trends and it’s one of the most important numbers for the Fed now.[5] If inflation gets stuck well above the Fed’s 2% target, say 4% to 5%, the bank could raise rates even higher than planned and keep them high for a while.[8] When borrowing costs increase, the economy slows down, unemployment increases, and the possibility of a recession grows.[8]

    The cost of groceries increased at a more moderate rate of 0.[9]

    0. “US CPI climbed 6.4% in January as inflation is still high” Business Insider, 14 Feb. 2023, https://www.businessinsider.com/how-high-is-inflation-cpi-report-january-price-growth-2023-2

    1. “Stock futures are flat after January inflation shows 6.4% annual increase: Live updates” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/13/stock-market-today-live-updates.html

    2. “Inflation Fell To 6.4% In January—But Is Still Worse Than Economists Expected As Rent, Food And Gas Prices Keep Rising” Forbes, 14 Feb. 2023, https://www.forbes.com/sites/jonathanponciano/2023/02/14/inflation-spiked-64-in-january-worse-than-economists-expected-as-rent-food-and-gas-prices-keep-rising

    3. “Inflation fell to 6.4% in January, hotter than expected” Washington Examiner, 14 Feb. 2023, https://www.washingtonexaminer.com/policy/economy/inflation-fell-to-6-4-in-january-hotter-than-expected

    4. “Inflation eased again in January – but there's a cautionary sign” WBUR News, 14 Feb. 2023, https://www.wbur.org/npr/1156542026/inflation-prices-recession-economy-federal-reserve

    5. “Monthly U.S. inflation accelerates in January, annual figure 6.4% By Investing.com” Investing.com, 14 Feb. 2023, https://www.investing.com/news/economic-indicators/monthly-us-inflation-accelerates-in-january-annual-figure-64-3002904

    6. “Retail inflation rises to 3-month high of 6.52% in January” The Hindu, 13 Feb. 2023, https://www.thehindu.com/business/Economy/retail-inflation-rises-to-3-month-high-of-652-in-january/article66504378.ece

    7. “Live updates: Stocks rise as annual inflation keeps falling” CNN, 14 Feb. 2023, https://www.cnn.com/business/live-news/stock-market-news-inflation/index.html

    8. “CPI shows U.S. inflation still sticky” MarketWatch, 14 Feb. 2023, https://www.marketwatch.com/story/cpi-shows-u-s-inflation-still-sticky-e08c9671

    9. “CPI Inflation Comes In Hot, Keeping Fed On Guard” Investor's Business Daily, 14 Feb. 2023, https://www.investors.com/news/economy/cpi-inflation-comes-in-hot-keeping-fed-on-guard-sp-500

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