WASHINGTON, Feb 29 Reuters U.S. prices picked up in January, but the annual increase in inflation was the smallest in nearly three years, keeping a June interest rate cut from the Federal Reserve on the table.

The personal consumption expenditures PCE price index rose 0.3 last month, the Commerce Department39;s Bureau of Economic Analysis said on Thursday. Data for December was revised lower to show the PCE price index gaining 0.1 instead of 0.2 as previously reported.

In the 12 months through January, PCE inflation rose 2.4. That was the smallest yearonyear increase since February 2021 and followed a 2.6 advance in December.

Economists polled by Reuters had forecast the PCE price index climbing 0.3 on the month and increasing 2.4 yearonyear. The monthly increase mirrored rises in consumer and producer prices last month, which most economists attributed to businesses raising prices at the start of the year.

Economists have argued that the model used by the government to strip out seasonal fluctuations from the data is probably not fully incorporating the beginning of year price hikes. Most do not expect the price increases to repeat in February.

It will be prudent to hold back on passing any strong judgment till February data comes out next month, if January39;s acceleration is a oneoff that was perhaps due to the failure of seasonal adjustment factors to incorporate the true extent of firms raising prices at the start of the year, or whether it39;s the beginning of…