Consumer prices increased by the most in nearly 1-½ years in January, with Americans facing higher costs for housing and food, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty about the economy.
The consumer price index, a broad measure of costs in goods and services across the U.S. economy, accelerated a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 3%, the Bureau of Labor Statistics reported Wednesday. They were higher than the Dow Jones estimates for 0.3% and 2.9%, respectively. The annual rate was 0.1 percentage point higher than December.
Markets tumbled following the news, with futures tied to the Dow Jones Industrial Average sliding more than 400 points while bond yields scaled sharply higher.
The surge in prices offered a cautionary note to President Donald Trump’s push for tariffs on imported goods, which have been panned by economists as inflationary.
Paul Ashworth, Chief North America economist at Capital Economics, told Reuters: “With President Trump threatening to impose wide-ranging inflationary tariffs, the Fed won’t resume cutting interest rates this year.”
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