AFP, WASHINGTON
US consumer inflation posted a surprise acceleration last month, government data showed yesterday, a development that could give policymakers pause as they mull the right time to start interest rate cuts.
While price increases have fallen from their peak in 2022, households are still feeling the pinch from costs of living, adding pressure on US President Joe Biden as he seeks reelection this year.
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The annual consumer price index (CPI) increased 3.2 percent year-on-year last month, the US Department of Labor said, a sign that these stresses may not ease quickly.
The "core" measure stripping out volatile food and energy prices rose 3.8 percent, above the 3.7 percent growth analysts expected.
The Labor Department noted that the indexes for shelter and gasoline both rose last month.
Combined, they contributed more than 60 percent of the monthly increase for the overall index, it said.
In the first two months, inflation rose 0.4 percent, ticking up from the prior month as well.
Analysts expect the US Federal Reserve to focus on underlying inflation when deciding the best time to start reducing rates.
To curb stubborn price increases, the central bank embarked on a series of rapid interest rate hikes in 2022, before holding the level at its highest in more than two decades at recent meetings.
The Fed has signaled it could start reducing rates this year, so long as there is continued progress in lowering inflation.
But the bumpy path to its long-term goal of two percent could bring some challenges.
The Labor Department flagged shelter inflation, which rose 0.4 percent month-on-month last month, as another key contributor to the overall index — though the figure represented a slowdown from January’s 0.6 percent growth.
Energy prices rose 2.3 percent from January to last month, a reversal of the previous month’s decline.
Economists expect Fed officials will want to see more evidence of prices coming down sustainably, before pivoting to rate cuts.
"The latest data further reinforce the case for a patient and vigilant approach from Fed officials as they consider future policy decisions," High Frequency Economics chief US economist Rubeela Farooqi said.
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