The CPI accelerated 0.3% month-on-month. However, this is less than the 0.4% expected by analysts.
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Gasoline prices, which collapsed last year due to activity restrictions to contain the COVID-19 pandemic, continued to rebound in January, pulling the general rise in prices, according to the published CPI index Wednesday by the Labor Department.
Inflation thus accelerated by 0.3% over one month. However, this is less than the 0.4% expected by analysts.
Inflation is on everyone’s mind right now due to the accommodating policy of the Central Bank (Fed), which floods the markets with liquidity, and Joe Biden’s proposal to quickly push through a new bailout for the economy. 1,900 billion dollars after more than 3,500 billion dollars under Donald Trump.
For gasoline prices alone, the increase amounted to 7.4% in January, “representing most of the increase in the index,” noted the ministry.
However, they remain 8.6% below their January 2020 level in unadjusted data for seasonal variations, the press release said.
Excluding volatile food and energy prices, so-called core inflation remains unchanged while analysts expected + 0.2%.
“Although the components measuring the prices of electricity and natural gas decreased, the energy index increased by 3.5% during the month,” the ministry also indicates.
Prices in the food sector increased slightly (+ 0.1%).
Over one year, inflation accelerated by 1.4%, driven in particular by higher prices in the food sector (+ 3.8%) or used vehicles and trucks (+ 10%).
Looking to the future, many economists agree that inflation could accelerate in the spring and possibly exceed the 2% target set by the US Central Bank.
But “it should be transitional,” said Kathy Bostjancic, chief economist at Oxford Economics in a note, since there is a catch-up effect after the price collapse in certain sectors such as construction and transport.
“Thus, the Federal Reserve should patiently observe this increase and delay the hike in (key) rates until mid-2023,” she opines.
Larry Summers, former Secretary of the Treasury to Bill Clinton and principal economic adviser to Barack Obama, recently warned against “inflationary pressures unheard of for a generation” if the Biden plan of a gigantic amount of 1,900 billion of dollars was adopted.
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