CPI -Report: Inflation increased unexpectedly in January

US inflation rose to 3 percent in January and strengthened the case for Federal Reserve to extend a break on interest rates.

The consumer price index unexpectedly crossed higher from a year earlier, data from the Bureau of Labor Statistics showed Wednesday, up from 2.9 percent in December. Compared to December, consumer prices rose 0.5 percent, faster than economists had expected.

“Core” CPI, which more closely reflects underlying inflation by removing volatile foods and energy prices, also showed little improvement. It rose 0.4 percent from December or 3.3 percent on an annual basis.

The data in January emphasized the uneven nature of the central bank’s fight against high prices. Inflation has subsided drastically since throwing just over 9 percent in 2022, but progress in recent months has been much more sporadic.

Last month, price increases in sectors closely monitored by consumers – from groceries to gasoline – were monitored declining in other categories such as clothing and furniture.

The grocery prices rose 0.5 percent compared to the previous month, or 1.9 percent on an annual basis. This was largely driven by a nationwide egg deficiency caused by an outbreak of avian flu or bird flu, which has pushed prices up 15.2 percent over the past four weeks.

Energy costs also increased another 1.8 percent over the month.

Price pressure continues at some point with extreme uncertainty about the prospects of the economy only weeks for President Trump’s second period in the White House. Tariffs, deportations, tax cuts and deregulation are expected to have an economic impact, but the final political mix will determine whether economists and decision makers will be more aware of the risk of revival inflation or an unexpected slowdown in growth.

In a social media post On Wednesday, Mr. Trump on the interest rate to be lowered and said it was “something that would go hand in hand with upcoming tariffs !!!”

But Fed has signed a little urgently to lower the rates for the time being, creating a potential clash with a president who showed a readiness to criticize the central bank in his first period as it opposed his demands for cuts. After a percentage point worth of cuts in the last three months of last year, the rates now hover between 4.25 percent and 4.5 percent.

In a speech with legislators this week as part of two days of hearings, Fed -Chairman Jerome H. Powell confirmed that a solid labor market meant that the central bank did not have to have a “haste” to lower the rates. Rather, he said that Fed was “well positioned to deal with the risks and uncertainties we are facing.”

Officials have suggested that as long as the labor market remains solid, they will have to see more material progress that inflation comes down again before pulling their political handles.

John Williams, President of the Federal Reserve Bank of New York, said in a speech on Tuesday that he expected progress towards the 2 percent inflation target, although he noticed that “it will take time before we can achieve this goal on a sustained basis. ”