The US consumer price index (CPI) increased by the most in nearly 1-1/2 years, with Americans facing higher costs for shelter, food, gasoline, and prescription medication. The CPI rose 0.5% in January, the largest gain since August 2023.
The increase was driven by a record surge in prescription medication prices, which jumped 53.0% year-on-year, as well as motor vehicle insurance, which rose 2.0%. Food prices also increased, with grocery store prices surging 0.5%, while shelter costs, including hotels and motel rooms, rose 0.4%.
The broader CPI index gained 3.0% year-over-year, the largest gain since June 2024. Economists had forecast a smaller increase, citing concerns about seasonal adjustments.
Federal Reserve Chair Jerome Powell said the data highlighted that inflation is not yet under control, and the central bank may need to take more drastic measures to achieve its 2% target.
The news sent stocks on Wall Street tumbling, while the dollar eased against major currencies. Higher inflation has raised hopes for a rate cut this year, but economists now believe it’s less likely due to concerns about tariff policy.
The Fed left interest rates unchanged in January, and economists expect tariffs on imported goods could fuel further inflation if they are eventually enforced.
Source: https://www.reuters.com/markets/us/us-consumer-prices-increase-more-than-expected-january-2025-02-12