Inflation gauge picked up last month

WASHINGTON >> An inflation gauge favored by the Federal Reserve increased in January, the latest sign that the slowdown in U.S. consumer price increases is occurring unevenly from month to month.

The government reported Thursday that prices rose 0.3% from December to January, up from 0.1% in the previous month. But in a more encouraging sign, prices were up just 2.4% from a year earlier, down from a 2.6% annual pace in December and the smallest such increase in nearly three years.

The year-over-year cooldown in inflation is sure to be welcomed by the White House as President Joe Biden seeks re-election. Still, even though average paychecks have outpaced inflation over the past year, many Americans remain frustrated that overall prices are still well above where they were before inflation erupted three years ago. That sentiment, evident in many public opinion polls, could pose a threat to Biden’s re-election bid.

January’s month-tomonth price increase will likely underscore the concern expressed recently by Federal Reserve officials about the risk of cutting interest rates too soon this year. Minutes from the Fed’s most recent meeting in January showed that most of the policymakers were wary of reducing rates prematurely, before inflation had sustainably returned to the Fed’s 2% target.

Thursday’s figures “very much explain why they were right to be cautious,” Omair Sharif, founder of Inflation Insights, a consulting firm, said of Fed officials. “They continue to want to get more confidence.”