A measure of inflation that is closely tracked by the Federal Reserve slipped last month in a sign that price pressures continue to ease.
Friday’s report showed that a sizable jump in energy prices – up 2.3% – boosted the overall prices of goods by 0.5% in February. By contrast, inflation in services – a vast range of items ranging from hotel rooms and restaurant meals to health care and concert tickets – slowed to a 0.3% increase, from a 0.6% rise in January.
Still, inflation remains stubbornly above the Fed’s 2% annual target, and opinion surveys have revealed public discontent that high prices are squeezing America’s households despite a sharp pickup in average wages. The combination of easing inflation and sturdy growth and hiring has raised expectations that the Fed will achieve a difficult “soft landing″ – taming inflation without causing a recession. If inflation continues to ease, the Fed will likely begin cutting its key rate in the coming months. Rate cuts would, over time, lead to lower costs for home and auto loans, credit card borrowing and business loans. They might also aid Biden’s re-election prospects.
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