WASHINGTON - Inflation in the United States cooled very slightly on an annual basis for a seventh straight month in January, narrowly continuing a deceleration that has come as supply chains have healed and prices have increased more slowly or even declined across an array of goods. But the details of the report offered reasons for concern.

Consumer price index data released on Tuesday showed that price increases picked up briskly on a monthly basis in January. That was true across both key measures: The one that includes fuel and groceries, and a “core” index that strips out those products because of their month-to-month volatility to get a better sense of the underlying inflation trend.

The price index was up 6.4 per cent in January compared with a year earlier. That was a very slight slowdown from 6.5 per cent in December and is down notably from a peak of 9.1 per cent last June. Compared with the previous month, prices climbed 0.4 per cent after stripping out groceries and fuel to get a sense of the underlying inflation trend – a rapid pace of growth that matched the increase in December.

The combination underlines that while the Federal Reserve has been receiving positive news on inflation – price increases are no longer relentlessly accelerating, the way they did for much of 2021 and the first half of 2022 – it could be a long and bumpy road back to normal.

“There has been an expectation that it will go away quickly and painlessly – and I don’t think that’s at all guaranteed,” Fed chairman Jerome Powell said at an event last week.

Much of the inflation slowdown in recent months has come from a moderation in price increases for goods and commodities. After stripping those out, services inflation – which includes healthcare, restaurant meals, pedicures and other non-goods purchases – has remained unusually rapid and has shown little sign of slowing down.

Officials at the Fed have been closely watching to see whether those service price increases can decelerate, betting that it will probably be necessary to drive them lower to return inflation to the 2 per cent they aim for on average and over time.

Policymakers are worried that it could be challenging to wrestle inflation back to normal at a moment when the labour market is so strong, in part because companies may charge more as they pay more to compete for a limited pool of workers. Wages are a major cost of doing business for many service providers.

Employers added more than half a million jobs in January, an unexpectedly robust number, and gains in average hourly earnings and other pay trackers remain rapid, though they have begun to slow.

How strong inflation and the overall economy prove in the coming months will influence how high Fed policymakers ultimately lift interest rates and how long they keep them elevated.

Central bankers have lifted their main policy rate from near zero to more than 4.5 per cent in less than a year, and have forecast that they will climb slightly above 5 per cent.

“The base case for me is that it will take some time, and we’ll have to do more rate increases, and then we’ll have to look around and see whether we’ve done enough,” Mr Powell said last week. NYTIMES