The Blubber

Consumer prices surged in January, pushing inflation to 3% for the first time since June and further squeezing Americans with rising living costs.

The Consumer Price Index (CPI) showed prices rose 0.5% from December — the fastest monthly increase since September 2023 — bringing the annual inflation rate to 3% for the 12 months ending in January, according to data released Wednesday by the Bureau of Labor Statistics.

U.S. stock futures dropped following the report, with investors worried that inflation’s reversal could prompt more aggressive interest rate hikes. Futures on the Dow, S&P 500, and Nasdaq fell roughly 1%, while the 10-year Treasury yield jumped to 4.6% in reaction to the hotter-than-expected data.

The CPI tracks price changes across commonly purchased goods and services, most of which saw increases last month. Energy and food prices continued to climb, with egg prices leading the charge due to a severe avian flu outbreak.

Egg prices skyrocketed 15.2% from December to January — the fastest monthly increase since 2015 — and are up 53% year-over-year.

Economists had expected a smaller 0.3% rise in prices from December, keeping the annual inflation rate at 2.9%, according to FactSet consensus estimates.

Because food and energy prices can be volatile due to factors like weather, disease outbreaks, and global supply chain issues, economists often focus on the “core” CPI, which excludes those categories to better assess underlying inflation trends.

Even the core index rose in January, climbing 0.4% for the month and pushing the annual core inflation rate to 3.3%, up from 3.2% in December.

Although inflation has slowed significantly since peaking at a 40-year high in 2022, prices remain well above pre-pandemic levels. The persistence of elevated inflation poses ongoing challenges for President Donald Trump as his administration looks to maintain economic stability.