Consumer prices in the United States have surged, recording their most significant increase in nearly one and a half years this January. The Consumer Price Index (CPI) rose by 0.5% for the month, driven by rising costs in shelter, food, and gasoline. This broad-based increase in prices resulted in an annual CPI rise of 3.0%.
The core CPI, which strips out volatile food and energy prices, saw a 0.4% gain in January, representing a 3.3% increase year-on-year. Rising inflation comes amid broader economic changes and dimming hopes for rate cuts in the near future. Experts point to a variety of factors, including market conditions and policy decisions, as contributing to the uptick in prices.
This inflation data is crucial for financial markets and could influence the Federal Reserve’s approach to interest rates in the coming months. Investors remain cautious as the economic outlook evolves. Wednesday’s data appeared to rattle investors, with Wall Street coming under pressure.
Surge in January consumer prices
The S&P 500 and Dow Jones Industrial Average were each down by about 1% after trading began in New York. The 10-year US Treasury yield, a key barometer for US economic expectations, rose to about 4.629%.
Inflation soared across much of the world three years ago as the pandemic continued to distort the global economy and disrupt supply chains. It peaked at 9.1% in the US, its highest level in a generation. While price growth has since fallen dramatically, consumer prices have remained high, proving remarkably resilient.
The latest inflation data will heighten speculation as to how quickly policymakers at the US Federal Reserve will cut interest rates, which they raised aggressively in an attempt to cool the world’s largest economy and reduce price growth. As millions of Americans struggled with the cost of living last year, Trump promised to take action. “Prices will come down,” he said during one speech.
“You just watch – they’ll come down, and they’ll come down fast.” Since his election victory last November, however, Trump has appeared to soften his pledge.
