Inflation started to rise again in February in the United States, as officials of the American central bank (Fed) feared, and while the subject of purchasing power is one of the central themes of the electoral campaign .
The increase in consumer prices was 3.2% year-on-year compared to 3.1% in January, according to the CPI index published Tuesday by the Labor Department. This disappointed analysts who saw it remaining stable.
Driven by housing, gasoline, and even plane tickets, the rise in consumer prices also accelerated over one month, to 0.4% compared to 0.3%. However, this is in line with what analysts expected, according to the Market Watch consensus.
The situation is a little better on the so-called core inflation front, which excludes volatile food and energy prices. It slowed down over one month, to 0.4%, and slowed down over a year, to 3.8% compared to 3.9%.
The American central bank, which leads the fight against inflation, meets next week, on March 19 and 20. And should not be happy about this unfavorable development.
After raising its rates since March 2022 to 5.25%–5.50%, the Fed is now considering lowering them, which should make credit more accessible, and give some financial room for maneuver to households and to businesses.
But to do this she wants to be certain that inflation slows down sustainably. Any rebound in prices therefore risks delaying the point at which rates begin to fall.
Balancing exercise
“If the economy performs as expected, it will likely be appropriate to begin easing monetary policy at some point this year,” Fed Chairman Jerome Powell said last week.
However, he warned that “the economic outlook is uncertain and continued progress towards our 2% inflation target is not assured.”
Fed officials are engaged in a delicate balancing act, as “cutting too soon or too sharply (rates) could result in a reversal of progress […] in terms of inflation and, ultimately, require even stricter policy to bring inflation back to 2%,” explained Jerome Powell.
Conversely, reducing them “too late or too little could unduly weaken economic activity and employment”.
Market players mainly anticipate a first rate cut in June, according to the CME Group assessment.
Inflation has been reduced by two thirds since its peak at 9.1% in June 2022. But it remains too high for the Fed, which is working to bring it down, while trying, however, not to bend the inflation too much. ‘economic activity.
The CPI index is the one on which American pensions are indexed. But the Fed favors another measure, the PCE index, whose data for February will be published on March 29.
In January, it fell over one year, to 2.4% against 2.6%, but accelerated over one month, to 0.3% against 0.1%.
The Fed wants to bring this inflation rate down to 2%, a target it expects to reach in 2026.