In January, the inflation rate in the United States rose back to the 3% range for the first time in seven months, demonstrating a "surprise increase" due to strong energy prices.
Amid steady economic growth in the United States, the inflation rate has risen significantly above expectations, heightening concerns about inflation.
The U.S. Department of Labor reported on the 12th (local time) that the Consumer Price Index (CPI) in January increased by 3.0% compared to the same month last year. This marks the first return to the 3% range since June of last year (3.0%).
The month-over-month increase, reflecting the recent trends in prices, also rose by 0.5%, the highest increase in 1 year and 5 months since August 2023 (0.5%).
Energy prices led the January price increase, rising by 1.1% compared to the previous month. Gasoline prices decreased by 0.2% compared to the previous year, but rose by 1.8% compared to the previous month.
Additionally, food prices rose by 0.4% compared to the previous month in January. In particular, due to the spread of avian influenza, egg prices surged by 15.2% compared to the previous month, continuing their upward trend. This increase in egg prices is the highest since June 2015. Housing costs rose by 0.4% compared to the previous month, contributing about 30% to the overall monthly increase.
The core CPI, excluding volatile energy and food prices, rose by 3.3% compared to the same month last year and by 0.4% compared to the previous month. The core index has stagnated at levels between 3.2% and 3.3% since the second half of last year. The core index is interpreted as a measure that relatively better reflects the fundamental trend of prices, excluding the short-term volatility of energy and food prices.
As inflation indicators unexpectedly remain at a high level, projections are mounting that the Federal Reserve (Fed) may effectively halt interest rate cuts this year. Concerns that the tariff policies, tax cuts, and immigration policies pivotal to President Donald Trump could trigger inflation are also bolstering this speculation.
On this day, both the representative Consumer Price Index and the core index recorded year-on-year and month-on-month increases that exceeded the Dow Jones' estimates by 0.1 to 0.2 percentage points.
As the consumer price index shocked with a surprising increase, bond revenues also surged.
According to the electronic trading platform Tradeweb, the yield on 10-year U.S. Government Bonds was 4.65% as of 9:15 a.m. (Eastern time) on that day, up 11 basis points (1 basis point = 0.01 percentage points) from the previous day's close.
According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market reflects an 88% probability that the Federal Reserve will keep the benchmark interest rate at the current 4.25% to 4.50% during the upcoming Federal Open Market Committee (FOMC) meeting in May. This is a 10 percentage point increase from the previous day.
Before the opening of the regular session on the New York Stock Exchange, the Standard & Poor's (S&P) 500 futures plunged, showing a decline of about 1% following the consumer price index announcement. The value of the dollar also surged. The dollar index, reflecting the value of the dollar against six major currencies, rose 0.4% to 108.4 at the same time compared to the previous day.