United States: Inflation comes in at highest level since May 2024 in January
Latest reading: Inflation increased to 3.0% in January, slightly above December’s 2.9%. January’s figure marked the highest inflation rate since May 2024 and was above market expectations. The uptick was largely due to higher transport price pressures.
The trend was unchanged, with annual average inflation coming in at December’s 2.9% in January. Meanwhile, core inflation ticked up to 3.3% in January from December’s 3.2%, also exceeding market expectations.
Lastly, consumer prices increased 0.47% in January over the previous month, picking up from the 0.36% increase recorded in December. January’s result was the highest reading since August 2023.
Panelist insight: On the monetary policy implications, Nomura analysts said:
“Although policymakers are cognizant of positive residual seasonality in January, [the] CPI report will likely result in the Fed becoming more cautious about inflation risks. This supports our Fed call of no rate cuts this year.”
ING’s James Knightley had a slightly different take:
“The Federal Reserve is going to find it challenging to justify rate cuts in the near future. Our view remains that September is the most likely point for the next move lower.”