US consumer inflation cooled down in January, but less than expected

Price hikes eased off less than expected in January, but still offered some relief for Americans who have suffered through the steepest price hikes in four decades.

The first measure of inflation for 2024, the Consumer Price Index, showed that prices rose by 3.1% for the 12 months ended in January, according to Bureau of Labor Statistics data released Tuesday. That marks a step back from December’s 3.4% rate and a dramatic cooling from the 6.4% increase seen in January 2023.

On a monthly basis, CPI rose by 0.3% in January, with stubbornly high shelter costs accounting for two-thirds of the gain, according to BLS.

Economists were expecting inflation to ease to 0.2% from December and slow to 2.9% annually, according to FactSet consensus estimates.

Annual price increases surged post-pandemic, peaking at 9.1% in June 2022. In its battle to bring down that inflation, the Fed introduced 11 aggressive rate hikes, starting in March 2022, meant to crush demand and discourage spending.

Excluding the more volatile categories of food and energy, the core CPI index rose 0.4% from December, and the annual rate held steady at 3.9%.