The consumer price index increased by three percent in January compared to a year ago, according to a Wednesday report from the Labor Department.
U.S. inflation rose last month with the price of groceries, gas, and used cars increasing, which could push the Federal Reserve to delay any interest cuts and severely hamper President Donald Trump’s ability to fulfill his campaign promise of bringing down prices.
The consumer price index is up 2.9 percent compared to last month, the Labor Department report found. That’s up from a three-and-a-half-year low in September when it was at 2.4 percent.
The numbers reveal that following inflation’s steady decline in 2023 and for large parts of last year, it has been above the Federal Reserve’s goal of two percent for about the last six months.
The rising prices were a major political headache for former President Joe Biden during last year’s campaign, and while Trump has promised to bring down prices, most economists believe that his proposed tariffs on a range of countries will do the opposite.
Core consumer prices rose 3.3 percent in January when excluding the categories of food and energy, which tend to be particularly volatile. That’s up from 3.2 percent in December. Core prices are closely followed by economists as they may provide a better view of the future.
The unexpected rise in inflation could dull some enthusiasm among businesses that came after Trump’s November election victory and amid his promises to cut taxes and restrict regulations. Bond yields were on the rise, likely meaning that traders expect inflation and interest rates to stay high.
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