A new report from the US Bureau of Labor Statistics indicates a 0.3% inflation in the price of goods and services across the country in January. Meanwhile, the annual consumer price index (CPI) dropped to 3.1% in the opening month of 2024 from the 3.4% displayed in December last year. However, it is still more than what experts and policymakers were looking for.
The US Inflation Report
The new US inflation data exhibited by the CPI showed a 0.3% increase in the prices of goods and services in over a month. The Labor Department blamed the “stubbornly high shelter prices” that are now weighing in on consumers as the catalyst for the increase. But then again, it managed to quell the annual CPI rates from the previous 3.4% to 3.1%.
The numbers are notably higher than the 0.2% monthly increase and 2.9% annual gain forecasted by Dow Jones economists. Nonetheless, they should be able to provide a key reference for the Federal Reserve for their next meeting.
Previously, the US central bank froze the interest rates at 5.25%-5.50% while dismissing hopes of a potential rate cut for the first quarter of 2024. Fed Chair Jerome Powell reasoned out that “there were no proposals to cut rates,” hence, their decision to keep the status quo.
Powell also denied plans for rate cuts in March, which evidently upset investors on Wall Street. On the other hand, he expressed confidence that inflation is already on its way to a sustainable level at 2%, which should provide the basis for a rate cut.
The latest data is still far from the Fed’s target, but the developments shown in the January data could present them with a key consideration in their reevaluation for a potential rate cut in March.
US President Joe Biden Criticizes Shrinkflation
As a way to offset the effects of US inflation, companies have devised a way to keep the prices of their goods but at the cost of reducing the size of their products or contents. This strategy, more rampant in the food and beverages industries, provides an avenue for producers to inconspicuously boost their profit margins amid the rising costs of inputs.
The practice also referred to as “shrinkflation” has been a hot topic for consumers as they feel that they are being ripped off. Recently, US President Joe Biden joined the fray in an attempt to sway the favor of the populace in an infomercial made during the Super Bowl weekend.
What’s so ironic about the POTUS’ ad is it seemed to have failed to recognize the root cause of the whole affair. The government’s inability to control its spending and debts as well as the mess made by its hit-or-miss policies have eventually led everyone here.
Again, we could hear JPMorgan CEO Jamie Dimon’s full summary covering the state of affairs in the US economy following the latest US inflation data. He wrapped up his outlook on the US economy saying, “It is a cliff, we see the cliff.”