US inflation is rising to 3 percent, groceries and gasoline prices that go higher

Washington (AP) – US inflation accelerated last month as the cost of groceries, gasoline and rents increased, a disappointment for families and businesses struggling with higher costs and probably emphasized the Federal Reserve’s decision to delay further rates.

The consumer price index increased 3% in January a year ago, Wednesday’s report from the work department showed up from 2.9% the previous month. It has risen from a 3 1/2 year low at 2.4% in September.

Watch LIVE: Powell testifies to House Financial Services Committee when inflation increases

The figures show that inflation has remained stubbornly over Fed’s 2% target for about the last six months after it fell steadily for about a year and a half. Increased awards created a great political obstacle to former President Joe Biden. President Donald Trump promised to reduce prices in last year’s campaign, though most economists worry that his many proposed tariffs could at least temporarily increase costs.

The unexpected boost in inflation could dampen some of the business enthusiasm that emerged after Trump’s choice of promises to reduce regulation and reduce taxes. Dow Futures tumbled 400 points and all major markets are likely to sell on the opening bell. The bond yield increased, a sign dealer expects inflation and interest rates to remain high.

“We really don’t make progress with inflation right now,” Sarah House, senior economist at Wells Fargo. “This just expands Fed’s grip.”

Inflation often jumps in January, as many companies raise their prices at the beginning of the year, although the government’s seasonal adaptation process is supposed to filter out these effects.

Still, House said the stubbornness of inflation wasn’t just a one -month blip. Consumers – especially richer – still use at a robust pace, giving many companies less reason to keep prices down. And much of the fall in inflation in 2023 and the beginning of last year came from improvements to the supply chain, but this trend has mostly played out.

Excluded the unstable food and energy categories rose core consumer prices 3.3% in January compared to a year ago, up from 3.2% in December. Economists see closely core prices because they can provide a better reading of the future path of inflation.

Inflation also worsened on a monthly basis, with prices jumping 0.5% in January from December, the biggest increase since August 2023. Core prices rose 0.4% last month, most since March 2024.

Prices of groceries rose 0.5% right in January, pushed higher with an increase of 15.2% in egg prices, the largest monthly increase since June 2015. Egg prices have risen 53% compared to a year ago.

An avian flu epidemic has forced many egg producers to beat millions of birds from their flocks. Some shops have introduced boundaries for egg purchases, and some restaurants have placed supplements on egg dishes.

The cost of car insurance continues to rise and pick up 2% from December to January. Hotel prices rose 1.4% last month, while the cost of a gallon of gas rose up 1.8%.

Later Wednesday, Federal Reserve President Jerome Powell witnessed the House Financial Services Committee, where he is likely to be asked about inflation and Fed’s response to it. Fed raised its benchmark rate in 2022 and 2023 to a two-year-old height of 5.3% to fight inflation. With inflation significantly down from its 9.1% top in June 2022, it cut its rate to approx. 4.3% in the last three meetings last year.

Fed’s rate typically affects other loan costs for items such as mortgage loans, auto loans and credit cards.

Early Wednesday, Trump said on social media that interest rates should be lowered: “Something that would go hand in hand with upcoming tariffs !!!” Nevertheless, check -ups in consumer prices are that it is soon less likely that Fed will reduce the rates at any time.

One sign of concern for economists is that commodity prices excluding food and energy rose 0.3% in January from the previous month. Prices for goods such as cars, furniture and appliances had been flat or fallen after the supply chain kinks derived from the pandemic were resolved. Still, the goods prices are now marked even before widespread tariffs have been set.

Trump has imposed 25% duty on steel and aluminum, which can push the cost of cars, appliances and industrial machines higher. He also said earlier this week that he would impose “mutual tariffs” on countries that have high tasks on US goods.

“There is just a casserole with uncertainty that if it lasts and dwells over the next few months, you could see business quiet coming down,” said Anthony Saglimbene, Chief Market strategist in Ameriprise. It could reduce employment and investment, he said.

Read more: When egg prices rise, the food store limits how many cartons of customers can buy

Inflation’s recent Uptick is a major reason why the Federal Reserve has paused its interest rate collections after implementing three of them last year. On Tuesday, Fed -Chairman Jerome Powell said “We don’t need to be in a hurry” to complete further reductions in testimony to the Senate Bank Committee.

Economists at Goldman Sachs predicted that annual core inflation would fall almost a full percentage point to 2.3%at the end of this year absent any import duty. But they expect customs to raise inflation to 2.8%.

On Tuesday, Fed -Chairman Powell recognized that higher tariffs could lift inflation and limit the central bank’s ability to reduce the rates and call it “a possible result.”

But he emphasized that it depends on how many imports have been affected by customs and how long.

“In some cases it doesn’t reach the consumer much, and in some cases it does,” Powell said. “And it really depends on the facts that we haven’t seen yet.”