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US inflation slowed to 3.1 per cent in January, as the Federal Reserve considers how soon to begin cutting interest rates.
Economists polled by Bloomberg had forecast annual consumer price inflation of 2.9 per cent, down from 3.4 per cent in December.
Core inflation, a closely watched measure that strips out volatile food and energy prices, was 3.9 per cent year-on-year in January, in line with the previous month.
The figures come as the Federal Reserve considers when to start cutting interest rates this year from their current level of 5.25-5.5 per cent.
The dramatic fall in inflation over the past year has prompted central bankers in the US, Europe and the UK to rule out further rate increases and start discussing the possibility of cuts.
Last month, Fed chair Jay Powell said the Federal Open Market Committee expects to cut interest rates three times this year, but he signalled it is unlikely to begin doing so until more progress has been made towards its 2 per cent inflation target.
The Fed’s preferred measure of inflation is the core personal consumption expenditures index, which has slowed more drastically than CPI. The core PCE index was up 2.9 per cent in January on annual basis, the first reading of less than 3 per cent in about three years.
The Fed’s next policy meeting is scheduled for March 19-20, at which it will release its latest “dot plot” survey showing officials’ projections for interest rates, inflation and unemployment.