United States: February inflation drops by four tenths, to 6% per annum

THE annual rate of inflation in the United States It continued to fall in February, for the eighth consecutive month, and stood at 6%, four-tenths lower than in January, according to data released on Tuesday by the Bureau of Labor Statistics (BLS, in English).

However, in monthly terms consumer prices increased by four tenthsat a time when the Federal Reserve faces close scrutiny for its measures to curb inflation, and even more now after the Silicon Valley Bank (SVB) debacle and fears of a banking crisis.

Although prices are rising much faster than the Fed wants, some economists are hoping for the central bank suspend the series of interest rate hikes a year when it meets next week.

With the collapse of two major banks since Friday fueling anxiety for other regional banks, the Fed may, for now, focus more on boosting trust in the financial system than in his long-term campaign to control inflation.

This is a sharp reversal from just a week ago, when President Jerome Powell suggested to a Senate committee that if inflation does not calm down, the Fed could raise its interest rate referenced by a substantial half a point in their meeting on March 21 and 22.

When the Federal Reserve raises its policy rate, it typically leads to higher rates mortgages, auto loans, credit cards, and many business loans.

The evolution of inflation

Compared to the prices of a year agoinflation has been declining for eight months.

In February, consumer prices increased by 6% compared to the previous 12 months, below year-over-year increase of 6.4% January and well below a recent peak for 9.1% in June. However, it remains well above the Fed’s 2% annual inflation target.

Core prices in February were up 5.5% from 12 months ago, up just shy of 5.6% in January.

Inflationary pressures remain entrenched in much of the economy. Rents, food prices, and the cost of hotels, restaurants, and airfare have all gone up as more Americans they look for accommodation and spend money on travel, dinners and entertainment events.

Jan Hatzius, chief economist at Goldman Sachs, said Goldman now believes Fed policymakers will halt their rate hikes next week.

Goldman had previously forecast a quarter-point hike. In a note to clients, Hatzius noted that the Fed, for now, still seems more focused on calming the banking sector and financial markets than fighting inflation.

AP AND EFE

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