- New CPI data showed inflation heated up at the start of the year.
- CPI increased 3% in January from a year ago, higher than the 2.9% forecast.
- On Tuesday, Fed chair Jerome Powell said that the economy is strong and the US isn’t in a recession.
In January, inflation unexpectedly accelerated.
The consumer price index rose 3% from a year ago, data published Wednesday showed. That’s above December’s rate and the consensus expectation, both of which were 2.9%.
The new data means inflation has heated up for four straight months.
“We want to see inflation move down, not up,” Mark Hamrick, Bankrate’s senior economic analyst, said in a statement to Business Insider before the new data was published.
Fed chair Jerome Powell said Tuesday in his regular semiannual testimony before the Senate Committee on Banking, Housing, and Urban Affairs that the economy is strong and the US isn’t in a recession.
“Labor market conditions have cooled from their formerly overheated state and remain solid,” Powell said. “Inflation has moved much closer to our 2% longer-run goal, though it remains somewhat elevated.”
The jobs report on Friday showed cooler job growth in January than expected, but unemployment cooled from 4.1% in December to 4%, and wage growth held steady.
“We’re seeing economic activity staying healthy, and as a result of that, it takes a little bit of the urgency off of the Federal Reserve,” Cory Stahle, an economist at the Indeed Hiring Lab, said after the jobs report was published on Friday.
CME FedWatch showed before the CPI report that there’s a 95.5% chance of a hold in interest rates at the next scheduled Federal Open Market Committee meeting in March. The FOMC held rates steady at its first scheduled 2025 meeting in January.
This is a developing story. Please check back for updates.
