1707831760 Inflation refuses to fall below 3 in the United States

Inflation refuses to fall below 3% in the United States, making interest rate cuts difficult | Business

Inflation refuses to fall below 3 in the United States

The President of the United States, Joe Biden, took advantage of this Sunday's Super Bowl to continue his offensive against supermarkets and food manufacturers for their price increases. While the Kansas City Chiefs' win reached television viewership levels not seen since man landed on the moon, Biden said on social media that manufacturers were disguising price increases by shrinking packaging, a process known as reduflation. It is an election year and one of the factors that has most damaged Biden's popularity is the rise in prices, especially of gasoline and food, which is reflected in families' almost daily consumption. For this reason, the president is now celebrating all favorable price data. The latest came this Tuesday: According to the Bureau of Labor Statistics, inflation fell to 3.1% in January.

The decline in inflation is slightly lower than expected by the market, which had forecast 2.9%. Core inflation was 3.9%, the same level as the previous month. The price increase this month was 0.3%, which is still high. The real estate index, which moves with some lag, continued to rise by 0.6% in January, accounting for more than two-thirds of the monthly increase in all items. Food prices rose 0.4% in January, while the energy index fell 0.9% for the month, largely due to the decline in the gasoline index.

Inflation has been contained, but price levels have not fallen, which partly explains why Biden is hardly benefiting from soft landing, a term that comes from the space race. The economy has started to slow its growth, although it is still expanding at a good pace and the unemployment rate is below 4% with subdued prices.

This situation will allow the Federal Reserve to start cutting interest rates this year, but in no hurry, and even less so after the latest published data showing that inflation is finding it difficult to fall below 3%. The market currently expects three 0.25 point rate cuts this year, and one per quarter starting next quarter. “The committee does not consider it appropriate to reduce the target range [de tipos de interés] “until you gain greater confidence that inflation is moving sustainably toward 2%,” Federal Reserve Chairman Jerome Powell said after the Jan. 31 meeting.

The consumer price index is not the measure of inflation that the central bank tracks most closely. Powell supports a personal spending deflator, which was already below 3% in December. In any case, any news that brings inflation closer to the 2% price stability target will be met with relief by the Federal Reserve and also by the White House.

[Noticia de última hora. Habrá ampliación en breve]

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