Inflation (Slightly) Cools

The consumer price index in January fell for the seventh consecutive month to 6.4% year-over-year growth, down from the 6.5% rise in December but greater than the 6.2% increase economists predicted. The data, released by the Labor Department yesterday, indicate it may take longer than anticipated for inflation to decrease.

Prices increased by 0.5% on a month-to-month basis, the largest increase in three months, with food (0.5%) and gas prices (2.4%) accounting for much of the increase. Core inflation, which excludes volatile food and energy prices, rose 0.4% over the month or 5.6% year-over-year. Rent (0.7%) was the largest contributor to the monthly increase, with prices for used cars, medical care, and air travel declining. See a breakdown here.

The inflation rate remains above the Federal Reserve's 2% target (see 101). Analysts expect the Fed to continue to deliver quarter-point interest rate hikes at its next two meetings in March and May with a 4.75%-5.00% year-end projection.