In the United States, there was an increase in consumer prices last month. This indicates that inflation continues to be a constant issue for both the Federal Reserve and President Joe Biden’s reelection campaign. They are hoping for a gradual decrease in price pressures throughout the year.

The Labor Department reported that prices increased by 0.4% in February, surpassing the previous month’s 0.3% increase. In comparison to the same time last year, consumer prices rose 3.2% last month, which was higher than the 3.1% growth seen in January.

Excluding the prices of food and energy, the prices known as “core” also rose 0.4% from January to February, which is the same rate as the previous month and quicker than what the Fed’s 2% goal allows for. Core inflation is closely monitored as it gives a more accurate indication of future inflation trends.

Higher gasoline prices contributed to an increase in overall inflation, as pump prices rose by 3.8% from January to February. The cost of groceries, however, remained the same last month and has only risen 1% in comparison to the previous year. In addition, clothing, used car prices, and rent also went up in February, which contributed to the overall inflation rate.

Although inflation increased in February, the majority of economists predict that it will gradually decrease throughout the year. However, this slight rise in the previous month may emphasize the Federal Reserve’s careful strategy when it comes to lowering interest rates.

Inflation has significantly decreased since its peak of 9.1% in June of 2022, but it is currently on a slower decline than it was during the previous spring and summer. Prices for certain items, such as appliances, furniture, and used cars, are now decreasing after being greatly inflated due to supply chain disruptions during the pandemic. The availability of new cars and electronics has increased, with more being stocked on dealer lots and store shelves.

On the other hand, the cost of dental services, car repairs, and other services continue to increase at a quicker pace compared to before the pandemic. Car insurance rates have significantly increased to account for rising expenses in repairs and replacements. Additionally, hospitals, which have increased salaries for nurses and other sought-after employees, are passing on their higher labor costs to patients through increased prices.

Voter views on inflation will undoubtedly play a significant role in the upcoming presidential election. Despite a strong job market and a historically high stock market, surveys indicate that a significant number of Americans hold Biden accountable for the rise in consumer prices that started in 2021. While inflationary pressures have lessened, prices still remain much higher than they were three years ago.

During his recent State of the Union address, Biden emphasized his efforts to lower expenses by implementing measures such as capping the cost of insulin for those on Medicare. He also condemned numerous big corporations for participating in “price gouging” and “shrinkflation,” where a company reduces the amount of product in a package instead of raising the cost.

Biden stated that numerous corporations are increasing their prices in order to boost their profits, resulting in higher charges for fewer products.

Last week, Jerome Powell, the director of the Federal Reserve, mentioned in his testimony to Congress that the bank is nearing a possible reduction in interest rates. Following the January meeting, the Fed released a statement stating that they required more certainty in the gradual decrease of inflation to meet their goal of a 2% target rate. Since then, multiple Fed officials have expressed their belief that prices will continue to decrease. They suggest that a contributing factor to this is the growing trend among consumers to resist higher prices by looking for more affordable options.

Economists predict that the Federal Reserve will likely lower its interest rate in June, though a cut in May is also plausible. The Fed’s reduction of its main rate can eventually lead to lower expenses for home loans, auto financing, credit card usage, and business borrowing.

One factor that could keep inflation elevated is the still-healthy economy. Although most economists had expected a recession to occur last year, hiring and growth were strong and remain healthy. The economy expanded 2.5% last year and could grow at about the same pace in the first three months of this year, according to the Federal Reserve’s Atlanta branch.

The Labor Department reported that last month, there were 275,000 job additions by employers, continuing a trend of strong hiring. The unemployment rate also remained below 4%, marking the 25th consecutive month of this achievement, the longest stretch since the 1960s.

However, there was an increase in the unemployment rate from 3.7% to 3.9% and a decrease in wage growth. These changes may give the Fed more assurance that the economy is slowing down, which could aid in keeping inflation low and potentially prompt the central bank to decrease interest rates.

Source: voanews.com