The annual inflation rate was down in January, falling to 3.1 percent.
The 3.1 percent fell from the 3.4 percent rate in December, according to new data on the consumer price index from the Bureau of Labor Statistics released Tuesday.
The all-items-less-food-and-energy index stayed at a 3.9 percent annual rate, the same as in December.
The new CPI data followed the Federal Reserve holding its target interest rates steady at the end of January at 5.25 to 5.5 percent. It was the third straight meeting for the Federal Open Market Committee keeping rates the same.
The continued pause in rate hikes followed the Federal Reserve’s aggressive approach to rein in inflation, which peaked above 9 percent in the summer of 2022. The Fed raised rates by 525 basis points since early 2022.
Federal Reserve Chairman Jerome Powell indicated that rates are not expected to increase.
“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said. “But the economy has surprised forecasters in many ways since the pandemic, and ongoing progress toward our 2 percent inflation objective is not assured. The economic outlook is uncertain, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate.”
The CPI increased 0.3 percent in January with shelter and motor vehicle insurance costs continuing to rise.
Motor insurance increased 1.4 percent in January and is up 20.6 percent in the past 12 months.
Used cars and trucks fell 3.4 percent in January on the index. Used vehicles are down 3.5 percent for the past year.
