Inflation accelerated in January, rising 3% per year, indicating a stagnation in the Federal Reserve system to at least temporarily lower inflation to 2%.
By numbers
The consumer price index was projected to rise 2.9% last month, according to an economist voted by Financial-Data company Factset. CPI, a basket of goods and services that consumers buy, usually tracks changes in these prices over time.
According to FactSet, CPI rose 0.5% each month. This is the biggest monthly jump since August 2023. This can be due to rising prices that many companies have set early in the year.
The report showed high inflation for the fourth consecutive month, showing that the following items saw price increases every month:
Egg: 15.2% Fuel oil: 6.2% Used cars and trucks: 2.2% Auto insurance: 2%
What the economist says
Recent sticky inflation data supports last month’s Federal Reserve decision Apply the brake Regarding additional interest rate cuts, economists say. On February 11, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee that the central bank “doesn’t have to hurry” to further ease fees.
“This isn’t a good number,” said Brian Callton, chief economist at Fitch Rating, in a January CPI data email. “This is beginning to look like a rerun for the first half of 2024.
He said, “and shows how the Fed has not completed the task of retreating inflation to regain the risk of new inflation from hiking tariffs and narrowing down labor supply growth.”
New data shows that inflation increased at the start of President Trump’s second administration. Imports of steel and aluminum.
Economists are forecast because, if enacted, the tariffs on imports passed on to US consumers, Trump’s import duties could increase inflation in 2025.
What does that mean for your money?
Higher borrowing costs will be longer: The Fed suspends its additional fee cuts, allowing consumers to pay more on loans and other debts, from credit cards to car loans.
“A stronger than expected today’s CPI release is Whitney Watson, global co-head and co-chief investment officer of bonds and liquidity solutions within Gollan Sachs Asset Management, email: “I They believe the Fed will likely continue to “wait and see mode” for the time being, and expect the Fed to stay on hold at next month’s meeting. ”
Mortgage fees may not be looking for relief anytime soon either. Despite the Fed’s cuts in 2024, mortgage interest rates remain near 7%, or close to 20 years high. Mortgage rates do not follow the Fed’s interest rate cut arc as they are based on economic data and 10-year Treasury yields.
“Mortgage rate progress is expected to occur only when inflation is included,” Lawrence Yun, chief economist at the National Association of Realtors, said in an email.
