The pace of consumer price increases eased again in January, the latest sign that the high inflation that has gripped Americans for two years is slowing.
At the same time, Tuesday’s consumer price report from the government showed that inflationary pressures in the U.S. economy remain stubborn and are likely to fuel price spikes well into this year.
What happened
The government said consumer prices rose 6.4% in January compared with 12 months earlier, down from 6.5% in December. It was the seventh straight year-over-year slowdown and well below a recent peak of 9.1% in June.
What it means
On a monthly basis, consumer prices increased 0.5% from December to January, much higher than the 0.1% rise from November to December. More expensive gas, food and clothing drove up inflation in January.
Why it matters
The Fed has aggressively raised its benchmark interest rate in the past year to its highest level in 15 years in its drive to get rampaging inflation under control. The Fed’s goal is to slow borrowing and spending, cool the pace of hiring and relieve the pressure many businesses feel to raise wages to find or keep workers.
What’s next
Economists expect inflation to fall to roughly 4% later this year. But it could plateau at that point so long as hiring and wage gains remain vigorous.
Georgia impact
Tuesday’s inflation figures showed services being a driver of higher prices more than goods. National Federation of Independent Businesses Georgia Director Hunter Loggins said Tuesday in a news release that while Georgia’s economy is improving, “small business owners remain cautious.”
“Small business owners want certainty, but inflation and supply chain issues are still a challenge, and employers say they’re still having a tough time finding people to fill the positions that are available,” Loggins said.
Hiring in Georgia was strong in December, the most recent data available. The NFIB said its January survey showed small business optimism was up nationally in January, but below its 49-year average sentiment. Nationwide, 26% of business owners reported inflation as their top problem, but that was down six points from December.
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