January 2024 Inflation Rate of 3.1% Exceeds Predictions

The all items CPI increased 3.1% in January 2024 from a year ago according to data from the Bureau of Labor Statistics. While this reading was higher than expected, it was lower than the inflation rate of 3.4% in the previous month (December 2023). The y-o-y increase in food prices was 2.6%, 6% for shelter, and 9.5% for transportation services, while energy prices declined by 4.6%.

The core Consumer Price Index (CPI), that excludes energy and food costs, registered a 3.9% y-o-y increase in January, mirroring the December uptick. Economic policymakers consider this metric to be a more reliable indicator of underlying inflation trends. The big question that everyone is asking is how the Fed will react to this data. This data will likely delay the Fed’s decision to cut interest rates since the labor market data released last week showed continued strength.

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