2024-02-13 14:24:19
(Washington) We will still have to wait to see inflation fall below 3% in the United States, and the January figures were disappointing, while the question of purchasing power is central in the race for the White House.
Consumer price inflation slowed to 3.1% year-on-year in January, compared to 3.4% in December, according to the CPI index released Tuesday by the Labor Department.
This rate, however, disappointed analysts, who hoped to see inflation fall below 3% for the first time since March 2021, when economic activity was recovering following the crisis caused by COVID-19. They were counting on 2.9%, according to the Market Watch consensus.
“Inflation has fallen by two-thirds compared to its peak (in June 2022, Editor’s note), but we know that there is still work to bring down costs,” commented President Joe Biden in a press release.
Inflation is one of the main campaign themes in the race for the White House, because soaring prices have sharply reduced the purchasing power of households.
Democratic President Joe Biden, a candidate for re-election, regularly highlights the virtues of his economic policy, nicknamed “Bidenomics”, which, according to him, has allowed the economy to remain strong and favor the less well-off and the class average, while slowing inflation.
However, he is accused of pursuing an inflationary policy by former President Donald Trump, who hopes to return to the White House and is well placed to win the Republican Party nomination.
Assurances auto : + 20,6 %
Over one month alone, the increase in prices was 0.3% in January, a little more than in December (0.2%), driven in particular by housing, which represents more than two thirds of this rebound.
As for so-called core inflation, which excludes volatile food and energy prices, it remains stable at 3.9% over one year, and up slightly over one month, at 0.4%. .
“This report will undoubtedly trigger a wave of inflationary pessimism,” underlines Gregory Daco, chief economist for EY Parthenon, who however sees it as “the perfect combination for disinflation in 2024”.
The slowdown in inflation, however, does not mean that prices have fallen, but that they have increased on average less quickly.
Certain products, however, cost less than a year ago, notably gasoline at the pump and gas, but also used cars or plane tickets. There is also relief on the food side, where the prices of dairy products, certain meats and eggs have also fallen.
On the other hand, in addition to housing, it is for car repairs, and especially for auto insurance (+20.6% over one year) that the problem lies.
Patience at the Fed
The inflation figures should also convince the American central bank (Fed) to be patient before beginning its monetary easing.
After raising its interest rates to their highest level in more than 20 years to slow demand and thus curb high inflation, it now plans to start lowering them in the coming months.
But those responsible for the institution are cautious, and will avoid launching the movement too early, because they want to be confident that the slowdown in inflation is lasting.
The CPI index is the one on which, in particular, pensions are indexed. The Fed favors another measure of inflation, the PCE index, which it wants to bring down to 2% – a level considered healthy for the economy – and whose data for January will be published on February 29 .
In December, PCE inflation remained stable at 2.6% year-on-year, but, excluding food and energy, fell to 2.9%, its lowest level in almost three years.
In the euro zone, inflation was 2.8% year-on-year in January, although there were strong disparities between countries. France is among the countries with the highest price increases, at 3.5%.
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