Housing's share of the CPI has now been raised, but weights for transportation and food were lowered. The revisions, updated seasonal factors and new weights prompted some economists to bump up their CPI forecasts.
Nevertheless, inflation is slowing, which would allow the Fed to continue with its small pace of rate hikes next month.
In the 12 months through January, the CPI increased 6.4%. That was the smallest gain since October 2021 and followed a 6.5% rise in December. The annual CPI peaked at 9.1% in June, which was the biggest increase since November 1981.
The moderation in price pressures reflects tighter monetary policy, which is weighing on demand, as well as improved supply chains. But it will be a while before inflation moves back to the Fed's 2% target because of sticky rents and a tight labor market, which are keeping prices for services elevated. The U.S. central bank has raised its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December. Economists believe the Fed could lift this rate above the 5.1% peak it projected in December and keep it there for some time. Excluding the volatile food and energy components, the CPI increased 0.4% after rising 0.4% in December. In the 12 months through January, the so-called core CPI gained 5.6% after rising 5.7% in December. (Reporting by Lucia Mutikani; Editing by Andrea Ricci and Chizu Nomiyama)
