US inflation index slows sharply | The Daily Star
12:00 AM, March 31, 2019 / LAST MODIFIED: 12:00 AM, March 31, 2019

US inflation index slows sharply

A key US inflation measure dropped sharply in January due to plunging energy costs, the Commerce Department reported Friday.

The cost for energy goods and services fell 6.4 percent at the start of the year, compared to January 2018, dragging the Federal Reserve's preferred inflation index down to 1.4 percent year-over-year, four tenths lower than the December rate. That was the lowest annual inflation rate since September 2016.

Even excluding volatile energy and food components, the PCE price index -- based on personal consumption expenditures -- slowed to 1.8 percent year-over-year, once again dropping below the Fed's 2 percent target.

The price index fell 0.1 percent compared to December, after a 1 percent jump in the final month of 2018, the report said.

Continued tame price pressures and increasing signs the US economy has peaked, at a time of slowing global growth, have prompted the Fed to pledge to hold off on further interest rate increases for the foreseeable future.

And some economists are predicting the central bank will have to cut rates later this year as growth slows, making the four increases last year look suspect.

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