Inflation cools slightly, but worrying details remain

It continues at pace more than 3 times as fast as was typical before the pandemic

Inflation has slowed from its painful 2022 peak but remains uncomfortably rapid, data released Tuesday showed, and the forces pushing prices higher are proving stubborn in ways that could make it difficult to wrestle cost increases back to the Federal Reserve's goal.

The consumer price index climbed 6.4% in January compared with a year earlier, faster than economists had forecast and only a slight slowdown from 6.5% in December. While the annual pace of increase has cooled from a peak of 9.1% in summer 2022, it remains more than three times as fast as was typical before the pandemic.

And prices continued to increase rapidly on a monthly basis as a broad array of goods and services,

including apparel, groceries, hotel rooms and rent, became more expensive. That was true even after stripping out volatile food and fuel costs.

Taken as a whole, the data underlined that while the Federal Reserve has been receiving positive news that inflation is no longer accelerating relentlessly, it could be a long and bumpy road back to the 2% annual price

gains that used to be normal. Prices for everyday purchases are still climbing at a pace that risks chipping away at economic security for many households.

“We're certainly down from the peak of inflation pressures last year, but we're lingering at an elevated rate,” said Laura RosnerWarburton, senior economist at MacroPolicy Perspectives. “The road back to 2% is going to take some time.”

Stock prices sank in the hours after the report, and market expectations that the Fed will raise interest rates above 5% in the coming months increased slightly. Central bankers have already lifted borrowing costs from near-zero a year ago to above 4.5%, a rapid-fire adjustment meant to slow consumer and business demand in a bid to wrestle price increases under control.

But the economy has so far held up in the face of the central bank's campaign to slow it down. Growth did cool last year, with the ratesensitive housing market pulling back and demand for big purchases like cars waning, but the job market has remained strong, and wages are still climbing robustly.

That could help to keep the economy chugging along into 2023. Consumption overall had shown signs of slow

PHOTOS BY CASEY STEFFENS — THE NEW YORK TIMES Monthly growth in food prices accelerated slightly in January, reversing a gradual decline seen in recent months, as the price of eggs, cookies and citrus fruits all rose.

Services inflation, which includes restaurant meals and other non-physical purchases, remains unusually rapid.