CPI Inflation Was Higher Than Expected In January | Global News Avenue

Until now, inflation should be slowing down. Instead, it is hitting the gasoline.

The Bureau of Labor Statistics said Wednesday that the cost of living rose 3% for the 12 months to January, as measured by the consumer price index, up from 2.9% in December. According to the highest annual rate since May, it exceeded forecasters’ expectations, according to a survey of economists’ economists Dow Jones News and Wall Street Journal.

The fourth month of rising inflation rates highlights how progress has stalled in the post-pandemic outbreak. The prices of essentials are still higher than typical annual tax rates before the pandemic. Rising housing, food and gas prices have driven up overall inflation.

What does today’s inflation report mean for the Fed?

The impact of unexpected increase in inflation in January on the Fed, which manipulated short-term loan rates to impact the economy and keep prices rising.

Federal Reserve Officials Keep the Fed’s funding rate stable At its last meeting in January, keeping above normal levels above normal, hoping to slow the economy and reduce inflation to 2%.

Higher inflation will reduce the Fed will soon lower interest rates (which will ease borrowers on credit cards and auto loans). According to the CME Group’s FedWatch tool, which predicts interest rate movements based on Fed funds futures trading data, most traders will not expect the Fed to lower interest rates by at least September. After the report was released, most of these people strengthened.

The Fed’s policy committee met again to set interest rates in March.

“We believe the Fed may remain ‘wait and view mode’ for the time being, and expect the Fed to remain on hold at next month’s meeting,” Whitney Watson, Global Co-head and Fixed Income Co-chair Investment Official Whitney Watson Goldman Sachs Assets The liquidity solution for management wrote in the comments.

Details of CPI report are not comfortable

Prices rose 0.5% in January since December, the highest monthly inflation rate since August 2023.

Core inflation, which excludes volatile prices, increased by 3.3% over the year, up from 3.2% in December. Economists and policy makers should consider “core” inflation measures when measuring inflation direction, because food and energy prices can fluctuate from a month to month. Rising prices for auto insurance, entertainment, used cars, healthcare, communications and airlines have all driven core inflation.

Price increases may get worse before they can get better. President Donald Trump vs. Prices of items from China. Further tariffs Mexico and Canada If Trump said, the prices of goods that could be effective from those countries if they came into effect in March. and Most things made of metal Once Trump imposes tariffs on steel and aluminum imports, it may become more expensive.