US Inflation Remained Higher Than Expected in January

Facts

• US inflation in January came in hotter than anticipated, as the Consumer Price Index (CPI) rose 0.3% month-over-month and 3.1% since January 2023, according to data released Tuesday by the Bureau of Labor Statistics (BLS).¹
• While US prices increased at a slower rate compared to December, when annual inflation was 3.4%, January’s figure remained higher than the 2.9% expectation forecasted by economists.²
• January's 0.3% increase also sat above the 0.2% expectation, and core inflation rose 3.9% annually and 0.4% monthly, holding steady from December. However, economists projected those figures to sit at 3.7% and 0.3%, respectively.³
• The rise in CPI, a broad measure of consumer prices for goods and services, was driven by a 6% annual rise in shelter prices, and a 0.6% monthly increase. Meanwhile, food prices increased 0.4% on the month, while energy fell 0.9%, primarily due to a 3.3% dip in gas prices.³
• The Dow Jones Industrial Average lost 700 points (1.8%) and the S&P 500 and Nasdaq Composite slid 1.7% and 2%, respectively, in response to the new data. Bond yields increased, with the 10-year Treasury note rising to 4.28%.⁴
• Previously, inflation prompted the Federal Reserve to raise the key interest rate 11 consecutive times from March 2022 to July 2023 in hopes of reaching its benchmark goal of 2%, but the central bank has held rates steady at a 22-year high of 5.4%.⁵

Sources: ¹Yahoo Finance, ²NBC, ³CNBC, ⁴CNN and ⁵CBS.

Narratives

• Republican narrative, as provided by Daily Caller. Despite the Fed hiking interest rates astronomically, the Biden administration has failed to get inflation under control. The American people can see the president's failures every time they open their wallets. This latest report means the Fed won't be cutting rates, and the US economy will remain shackled by Biden's inflation.
• Democratic narrative, as provided by PBS NewsHour. It's unrealistic for the economy to beat every monthly forecast. But inflation has been cooling dramatically and that trend continued in January. Under Biden, the economy is better than it was a year ago and is on its way to a full recovery. Bideneconomics continues to be a boon to the American consumer.

Predictions