WASHINGTON — A measure of inflation may have fallen to a five-year low in January as rental costs have cooled, a sign that some prices are moderating while Americans continue to grapple with a big rise in overall prices in the past five years.
Inflation is forecast to have fallen to a 2.4% annual rate in January from 2.7% in December in the latest government report on consumer prices to be issued Friday. That would be the lowest rate in nine months. Core prices, which exclude the volatile food and gas categories, are expected to decline to 2.5% from 2.6%, the lowest in nearly five years, according to data provider FactSet.
On a monthly basis, inflation may show signs of remaining elevated: Overall and core prices are expected to rise 0.3% in January from December, a pace that if maintained for several months would start to push annual inflation higher.
Friday’s report may point to cooling inflation, but it comes after the cost of food, gas, and apartment rents have soared since the pandemic, with consumer prices about 25% higher than they were five years ago. The increase in such a broad range of costs has become a high-profile political issue under the rubric of “affordability.”
If inflation gets closer to the Federal Reserve’s target of 2%, it could allow the central bank to c