FEBRUARY 17, 2025 – INFLATION RISES TO 3 PERCENT IN JANUARY
Consumer prices rose in January by 0.5 percent, which translates to a 12-month increase of 3 percent. This was the largest increase since August 2023 and ahead of expectations for a rise of 0.3 percent. The January data has likely ended hopes for an interest rate adjustment in the short term, as inflation is to be tracking well above the Fed’s 2 percent target.
Core inflation, excluding food and energy, was up 0.4 percent for the month, the largest increase in two years. On a 12-month basis, core inflation was up 3.3 percent.
The Fed has been cautious about lowering rates too soon, and the latest data supports their stance; as well, the yet unknown effects of the proposed tariffs could further drive up inflation this year. The good news is economists do not expect the Fed to raise rates, unless inflation accelerates, and the job market takes off.