Inflation in the U.S. showed signs of slowing in January, reaching its lowest point since summer 2022 at 2.5%, still above the Federal Reserve's 2% target. The core Personal Consumption Expenditure Index, which the Fed closely monitors, marked a seven-month low at 2.6%. Alongside these developments, the personal savings rate also increased to 4.6%, the highest since June 2022. Despite these improvements, the Fed projects that inflation will not dip to its target level until at least 2027, indicating a prolonged period of elevated inflation expectations.
The Personal Consumption Expenditure Index fell indicates that prices in January had risen by 2.5 percent over the previous 12-months, a decrease from 2.6 percent in December.
The core CPE Index, the Fed's favored gauge of inflation, fell to a seven month low in January, hitting 2.6 percent. This matched the forecasted inflation rate of 2.6 in January.
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