[Economics] Rate cuts put on ice as consumer inflation surges to a 9-month high

[-_-Moltres-_-]

 

U.S. inflation accelerated last month as the cost of groceries, gasoline and rents rose, a disappointment for families and businesses struggling with higher costs and likely underscoring the Federal Reserve’s resolve to delay further interest rate cuts.Grocery prices climbed 0.5% just in January, pushed higher by a 15.2% surge in egg prices, the biggest monthly increase since June of 2015. Egg prices have soared 53% compared with a year ago.Elevated prices created a major political hurdle for former President Joe Biden. President Donald Trump pledged 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 arose after Trump’s election on promises to reduce regulation and cut taxes. Dow futures tumbled 400 points and all major markets are likely to sell off at the opening bell. Bond yields rose, a sign traders expect inflation and interest rates to remain high. No progress on inflation “We’re really not making progress on inflation right now,” Sarah House, senior economist at Wells Fargo. “This just extends the Fed’s hold.” Inflation often jumps in January as many companies raise their prices at the beginning of the year, though the government’s seasonal adjustment process is supposed to filter out those effects. Yet House said inflation’s stubbornness wasn’t just a one-month blip. Consumers — particularly wealthier ones — are still spending at a robust pace, giving many companies less reason to hold down prices. And much of the decline in inflation in 2023 and early last year stemmed from supply-chain improvements, but that trend has mostly played out. Excluding the volatile food and energy categories, core consumer prices rose 3.3% in January compared with a year ago, up from 3.2% in December. Economists closely watch core prices because they can provide a better read of inflation’s future path.

https://fortune.com/2025/02/12/interest-rate-cuts-inflation-consumer-price-index/