Market Updates
January's Consumer Price Inflation Supports Fed's Resolve to Delay Rate Cuts
Brian Turner
12 Feb, 2025
Washington, D.C.
Consumer price inflation accelerated to an annual pace of 3.0% in January from 2.9% in December, the U.S. Bureau of Labor Statistics reported Wednesday.
On a monthly basis, January's consumer price index advanced 0.5%.
Core inflation, which excludes food and energy prices, increased 0.4% from the previous month and advanced at an annual pace of 3.3%.
Consumer price inflation is largely driven by the sustained increase in shelter costs, which accounted for 30% of the increase, and advanced at a slower annual pace of 4.4% from 4.6% in the previous month.
Moreover, fuel prices rose at an annual pace of 1%, compared to a decline of 0.5% in December, and rose for the first time in six months.
Investors are awaiting the release of producer price inflation later in the week.
On Wednesday, Federal Reserve Chairman Jerome Powell, in answering a question from a member of the House Financial Services Committee, said a better measure of inflation would be the PCE Price Index than the CPI, which takes into account consumer behavior.
On Tuesday, Fed Chair Powell confirmed while appearing in front of the Senate Banking Committee that the U.S. economy is on solid footing and labor market conditions are favorable and strong, and the central bank is in no hurry to increase rates in the near future.
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