CPI jumps in January; stocks move sharply lower
Price pressures stayed stubbornly elevated even before the impact of new trade tariffs put in place by President Donald Trump.
U.S. consumer inflation ticked surprisingly higher in January, sending stocks sharply lower.
Price pressures stayed stubbornly elevated even before the impact of new trade tariffs put in place by President Donald Trump.
The Commerce Department said its headline Consumer Price Index for January was pegged at an annual rate of 3%, accelerating from the 2.9% pace recorded in December and the fastest level since May.
On a monthly basis, price pressures edged 0.5% higher, faster than the December advance of 0.4%, thanks in part to an 1.8% increase in domestic gasoline prices. It was the highest rate since June.
So-called core inflation, which strips out volatile components like food and energy, quickened to an annual rate of 3.3%, topping Wall Street's 3.1% forecast and pegged at the highest rate since May.
The monthly core reading of 0.4% was also faster than Wall Street forecasts and matched the final November reading of 0.3%.
U.S. stocks extended declines following the data release, with futures contracts tied to the S&P 500 indicating a 55-point decline and those linked to the Nasdaq priced for a 185-point slide. The Dow industrials were last called 390 points lower.
Related: Gold price eyes $3,000 as bullion surges on Trump tariff risks
Benchmark 2-year Treasury note yields rose 7 basis points to 4.363% while 10-year notes jumped 7 basis points to 4.619%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.5% higher at 108.441
More Economic Analysis:
- 12 things to know about Trump's new tariffs
- Jobs reports to reset Fed interest rate forecasts
- Inflation report upends Fed interest rate cut bets in 202
CME Group's FedWatch, meanwhile, continues to suggest traders aren't expecting a rate cut from the central bank until at least June, and possibly September, and have pared bets on a second cut before the end of the year to around 38%.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
