Feb 13, 2024 - Economy

Consumer Price Index is hotter than expected in January

Shoppers at grocery store

Photo: Li Jianguo/Xinhua via Getty Images

The Consumer Price Index rose 3.1% in the 12 months through January — a bigger jump than expected —while the monthly gain sped up, the Labor Department said on Tuesday.

Why it matters: While price pressures have moderated overall, getting inflation completely back to normal may be more difficult than economists anticipated.

By the numbers: The 3.1% rise in overall CPI compares to the 3.4% increase in December.

  • Meanwhile, core CPI — which excludes energy and food costs — rose 3.9% in the year through January, the same increase as December. Economic policymakers see this measure as a better gauge of underlying inflation.
  • On a monthly basis, CPI rose 0.3% after rising 0.2% in December. Core CPI rose 0.4%, up from the 0.3% gain the previous month.

State of play: The inflation slowdown over the past year has so far happened alongside a solid economy — bucking predictions that the U.S. would need to enter a recession for price pressures to ebb. The big question is whether that will continue in 2024.

  • The Federal Reserve is contemplating when and by how much to slash the interest rates that they hiked rapidly in recent years to tamp inflation.
  • In recent days, Fed officials say they want more evidence that the war on inflation is won before lowering interest rates.

The big picture: The Biden administration has been touting recent progress on inflation as it looks to sell its economic agenda.

  • Despite a strong labor market and economy, consumer sentiment has only recently started to rebound and voters still give Biden low marks on the economy.

Go deeper: How the Fed's inflation fight has changed over the last year

Go deeper