US personal consumption increased at the slowest pace since 2021 (Shutterstock)

Price levels increased in the United States last January, led by service costs, but the annual increase in inflation was the lowest in 3 years, which leaves an interest rate cut in the middle of the year by the US Federal Reserve on the table.

The report from the Commerce Department showed consumer spending slowed last month, limited by lower expenditures on goods, including cars, furniture and other long-term household equipment. Inflation and consumer spending readings were in line with economists' expectations.

Service prices

But with services prices rising 0.6% last month, likely due to companies raising prices at the start of the year, the timing of the first rate cut remains uncertain.

Service price levels, which include housing and health care, remain at the heart of the US Central Bank's fight against inflation, and the US Monetary Policy Committee said in the minutes of its last meeting in January that it is in no hurry to start cutting interest rates.

Reuters quoted Christopher Rupke, chief economist at FWD Bonds in New Delhi, as saying: “The economy is not off track, and the inflation scare seems unlikely to continue in January, so officials are still likely to consider... "The Fed is on its first rate cut when they meet in June."

According to the Bureau of Economic Analysis of the Department of Commerce, the personal consumption expenditures price index increased by 0.3% last month, and data for last December was revised downward to show that the personal consumption expenditures price index rose by 0.1% instead of 0.2% as previously reported.

Commodity prices decreased by 0.2%, with the cost of energy decreasing by 1.4%, which offset the increase in food prices by 0.5%.

Economic terms... Federal (Al Jazeera)

Personal spending

In the 12 months to January, inflation in personal consumption expenditures rose 2.4%.

This was the smallest year-on-year increase since February 2021, and comes after a 2.6% rise in December 2023.

Gold prices in spot transactions increased 0.61% to 2046 per ounce, at the time of preparing the report, and the March delivery price per ounce increased 0.75% to 2048 dollars.

The dollar index settled at 103.97 points against 6 major currencies.

American stock market indices rose collectively, as the Dow Jones Industrial Average rose 0.1% to 38,953 points, the Nasdaq index rose 0.47% to 16,022 points, and the broader Standard & Poor's 500 index rose 0.27% to 5,083 points, at the time of preparing the report.

Source: Reuters