US CPI Data for January released, inflation numbers throw surprise

If inflation slows down toward the Fed's target, Wall Street investors anticipate the first rate drop in May.

Updated: February 13, 2024 19:17 IST

US CPI Data, date, time, release, inflation, rate cut, market, investors

Wall Street has been cautioned by senior Fed officials that interest rate reductions are unlikely in the foreseeable future.

The latest inflation numbers show that the US inflation rate is above forecasts. The annual inflation rate in the US fell back to 3.1% in January 2024 following a brief increase to 3.4% in December but came higher than forecasts of 2.9%. Compared to the previous month, the CPI edged up 0.3%, the most in four months, and above forecasts of 0.2%. Also, annual core inflation held steady at 3.9%, compared to expectations it would slow to 3.7%. The monthly rate edged up to 0.4%.

The latest inflation numbers also show that the US Core CPI has risen more than expected. The US core consumer prices, which exclude volatile items such as food and energy, rose by 0.4% from the previous month in January of 2024, accelerating from the 0.3% increase in the earlier period and above market expectations of a 0.3% increase. The sharpest increase in core consumer prices since April 2023 challenges the US economy’s disinflation trend and strengthens the FOMC’s case for hawks.

The all items index rose 3.1 percent for the 12 months ending January, a smaller increase than the 3.4-percent increase for the 12 months ending December.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment.

The all items less food and energy index rose 3.9 percent over the last 12 months, the same increase as for the 12 months ending December. The index for all items less food and energy rose 0.4 percent in January.

The annual core consumer price inflation rate in the United States, which excludes volatile items such as food and energy, stood at a 2-1/2-year low of 3.9% in January 2024, unchanged from the prior month and above market forecasts of 3.7%. Monthly, core consumer prices rose by 0.4% in January, up from 0.3% in the prior month and slightly above market estimates of 0.3%.

A hotter-than-expected CPI report strengthened expectations for a delayed rate cut. The market sees no chance for a rate hike in March hand the odds for an increase in May are about 1/3 while the hike in June is fully priced in. In January, the US inflation rate decreased to 3.1% year-on-year, the lowest since March 2021, but remained slightly above the market’s forecast of 2.9%. Furthermore, annual core inflation stood at 3.9%, surpassing expectations of 3.7%. Consumer prices rose by 0.3% month-over-month, while the core rate increased to 0.4%, both exceeding expectations.

February 2024 CPI data are scheduled to be released on March 12, 2024, at 8:30 A.M. Eastern Time.

This article was first uploaded on February thirteen, twenty twenty-four, at seven minutes past seven in the evening.