NEW YORK - Rising rents, a gasoline price rebound and vehicle costs helped keep US inflation elevated in January, analysts say, amid signs that policymakers have some way to go in bringing prices down.
The US central bank has hiked interest rates rapidly in the past year to raise borrowing costs and cool demand in the world's biggest economy, as inflation skyrocketed.
But even as the consumer price index (CPI), an important inflation gauge due to be released Tuesday, eases from last year's decades-high levels, analysts warn of some stickier areas.
Overall, the CPI rose 6.5 percent in December compared with a year ago, furthering a steady decline from June's blistering 9.1 percent reading.
The so-called core figure excluding the volatile food and energy components, however, has fluctuated over the same period. It fell to 5.9 percent in June, rose to 6.6 percent in September and then slipped again.
"The area that I'm concerned about is services inflation, which is more related to the strength of the domestic economy, particularly the labour market, and nominal wage growth," said Ryan Sweet, chief US economist at Oxford Economics.
Rental costs "won't peak until the second half of this year," while wage growth remains robust and there is still pent-up demand for services spending, he told AFP.
"During the pandemic, people shifted their spending away from services because they couldn't go out to restaurants, bars, sporting events," he said.
With Covid-19 restrictions easing, people are now turning back to services, which make up the bulk of consumer spending, Sweet said.
Economists expect overall inflation to have cooled further in January on an annual basis.
But they forecast the CPI to have risen 0.5 percent from December to January, picking up from a prior 0.1 percent pace.