Annual inflation increased to 3 percent from 2.9 percent in January, according to a Wednesday report from the Labor Department.
The price of groceries, gas, and used cars are increasing with the rise in inflation, which could push the Federal Reserve to delay any interest cuts and severely hamper President Donald Trump’s ability to fulfill his campaign promise of bringing down prices.
The numbers reveal that following inflation’s steady decline in 2023 and for large parts of last year, it has been above the Federal Reserve’s goal of two percent for about the last six months.
Inflation also got worse on a month-to-month basis, with prices increasing 0.5 percent last month compared to December — the largest boost since August 2023. Core prices rose 0.4 percent last month, which was the most significant increase since March last year.
The rising prices were a major political headache for former President Joe Biden during last year’s campaign. While Trump has promised to bring down prices, most economists believe that his proposed tariffs on a range of countries will do the opposite.
Annual core inflation, excluding the categories of food and energy, which tend to be particularly volatile, rose to 3.3 percent in January from 3.2 percent in December. Core prices are closely followed by economists as they may provide a better view of the future.
The unexpected rise in inflation could dull some enthusiasm among businesses that came after Trump’s November election victory and amid his promises to cut taxes and restrict regulations. Bond yields were on the rise, likely meaning that traders expect inflation and interest rates to stay high.
One of the most notable jumps for consumers has been the tremendous increase in the cost of eggs. The price of groceries rose 0.5 percent just last month, boosted by a 15.2 percent increase in the price of eggs. That’s the largest month-to-month increase since June 2015. Compared to a year ago, egg prices are up 53 percent. An epidemic of avian flu has pushed many egg producers to cull millions of birds, some stores have put restrictions on egg purchases, and some restaurants have put extra charges on dishes using eggs.
Other prices also jumped: the cost of car insurance rose 2 percent between December and January, while hotel prices went up 1.4 percent, and the price of gas rose 1.8 percent.
The Federal Reserve raised its rate in 2022 and 2023 to 5.3 percent, the highest in two decades, to take aim at inflation. Following the decline in inflation from its 9.1 percent high point in June 2022, it cut its rate to about 4.3 percent in its last three meetings of 2024.
In a Truth Social post on Wednesday, the president blamed the rise in inflation on former President Joe Biden.
“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!” he wrote. However, the rise in consumer prices makes it unlikely that the Federal Reserve will cut its rates in the near future.
“We do not need to be in a hurry,” Fed Chair Jerome Powell told the Senate Banking Committee on Tuesday. He also acknowledged that higher tariffs could lead to a rise in inflation and the Fed’s ability to cut its rates.
The Associated Press contributed to this report.
