CPI Report: Inflation Rose Unexpectedly in January

A chart showing inflation, which was up 2.9 percent for a year through January, and inflation that excludes energy and food prices, which was up 3.0 percent.

U.S. inflation rose to 3 percent in January, strengthening the case for the Federal Reserve to extend a pause on interest rate cuts.

The Consumer Price Index jumped more than expected, data from the Bureau of Labor Statistics showed on Wednesday, rising 0.5 percent from December in what was the fastest monthly increase since August 2023. Last month, the annual pace was 2.9 percent.

“Core” C.P.I., which more closely reflects underlying inflation by removing volatile food and energy prices, also showed little improvement. It rose 0.4 percent from December or 3.3 percent on a year-over-year basis, both higher than economists expected. The monthly increase in core prices was the highest since April 2023.

The January data underscored the uneven nature of the central bank’s battle against high prices. Inflation has subsided drastically since cresting just above 9 percent in 2022, but progress in recent months has been much more sporadic.

Last month, price hikes in sectors closely watched by consumers — from groceries to gasoline — offset declines in other categories like clothing and furniture.

Grocery prices climbed 0.5 percent compared with the previous month, or 1.9 percent on a yearly basis. That was driven in large part by a nationwide egg shortage caused by an outbreak of avian influenza, or bird flu, which has pushed prices up 15.2 percent over the past four weeks. Since last year, egg prices are up 53 percent.