Inflation rebounded in February in the United States, raising fears that interest rates will remain high for longer than expected, and while the subject of purchasing power is one of the central themes of the electoral campaign.
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The increase in consumer prices was 3.2% over one year compared to 3.1% in January, according to the CPI index published Tuesday by the Labor Department, disappointing analysts who saw it remaining stable.
Driven by housing, gasoline, and plane tickets, inflation also accelerated over one month, to 0.4% compared to 0.3%.
The good news, however, comes from core inflation, a less volatile measure of price changes that excludes energy and food prices.
Over one year, it fell to its lowest level since May 2021, at 3.8% over one year, compared to 3.9% in January. Over one month, it is stable at 0.4%.
“Prices of major household purchases such as gasoline, milk, eggs and household appliances are lower than a year ago,” welcomed US President Joe Biden in a statement.
“We still have a lot to do to reduce costs and give a fair chance to the middle class,” insisted the Democrat, who hopes to be re-elected in November, against the likely Republican candidate, Donald Trump.
He has just presented his proposed 2025 budget in the style of a campaign program, centered on tax increases for billionaires and multinationals, in order to free up resources to finance investments and help the middle class with housing.
“Caution”
Households and businesses are also watching for interest rates to fall, in order to be able to borrow at a lower cost.
But officials at the American central bank (Fed), who are meeting on March 19 and 20, have warned that they want to be certain that inflation slows down sustainably, before starting to lower the key rate.
This rebound in inflation “will further strengthen the caution of Fed officials,” according to Kathy Bostjancic, chief economist at Nationwide, who considers it “increasingly likely that (the Fed) will wait at least until June.”
Market players are mainly counting on a first rate cut in June, according to the CME Group assessment.
Ryan Sweet, chief economist for Oxford Economics, even evokes “a pessimistic scenario”, which he nevertheless considers “possible but unlikely”, but which would see the Fed “start to raise rates again”.
The Fed, to curb high inflation, raised its rates by 5 points from March 2022 to July 2023, an unprecedented pace, bringing them up to 5.25%-5.50%.
“Uncertain prospects”
“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, because “cutting rates too early or too sharply” risks sending inflation back up, and could require raising rates again, Jerome explained. Powell. Conversely, reducing them “too late or too little could unduly weaken economic activity and employment”.
Inflation has been reduced by two-thirds since peaking at 9.1% in June 2022.
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 reduce this inflation rate to 2%, a goal it plans to achieve in 2026.
