US inflation rose in January, strengthening the Federal Reserve’s case to keep interest rates on hold despite President Trump’s fresh demands for rate cuts.
The consumer price index posted its biggest increase since August 2023, government data released Wednesday showed, jumping by 0.5% as the price of groceries and gas ticked upwards.
The headline inflation figure now sits at 3%, while the core consumer price index (CPI) – which excludes food and energy costs – saw a bigger-than-expected climb to 3.3%.
Higher shelter costs contributed to almost 30% of January’s overall inflation increase, while car insurance, prescription drug, and airfare costs all put upward pressure on the core numbers.
Traders are only expecting the Fed to cut once in 2025, interest rate swaps showed after the release of the Bureau of Labor Statistics report. Two cuts were previously anticipated.
The central bank opted to hold rates unchanged in its first announcement of the year, citing inflationary concerns as a key reason for its decision to pause a run of cuts.
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