Fed’s Favored Inflation Indicator Falls to Lowest Rate Since June

Inflation slowed in January to its lowest level since last summer, according to a key metric. However, inflation still remains above the Federal Reserve’s target of 2 percent, and inflation has been above the target since February 2021.

The Personal Consumption Expenditure Index fell indicates that prices in January had risen by 2.5 percent over the previous 12-months, a decrease from 2.6 percent in December. 

The core CPE Index, the Fed’s favored gauge of inflation, fell to a seven month low in January, hitting 2.6 percent. This matched the forecasted inflation rate of 2.6 in January.

The personal savings rate similarly hit its highest rate since June, with Americans saving 4.6 percent of their incomes.

The Fed does not anticipate the inflation to fall to the 2 percent target until 2027.