US inflation heats up to 3% for first time since June

CNN
 — 

Consumer prices roared higher in January, driving inflation up to 3% for the first time since June of last year and further raising the cost of living for Americans.

Consumer prices rose 0.5% from December — the fastest monthly pace since September 2023 — resulting in an annual inflation rate of 3% for the 12 months that ended in January, according to the latest Consumer Price Index data released Wednesday by the Bureau of Labor Statistics.

US stock futures dropped after the report was released, with investors concerned that inflation has reversed its recent progress and could lead to higher interest rates. Futures on the Dow, S&P and Nasdaq were all lower by around 1%. The 10-year Treasury yield surged to 4.6% on the hotter-than-expected data.

The CPI measures price changes across commonly purchased goods and services, and most of the categories saw increases last month. Energy and food costs continued to bite — particularly for eggs, which have seen prices soar due to a deadly avian flu.

Egg prices shot up 15.2% from December to January, the fastest increase that index has seen since 2015, according to the report. They’re up 53% year over year.

Economists were expecting inflation to pick up 0.3% from December, keeping the annual rate at 2.9%, according to FactSet consensus estimates.

Food and energy can be quite volatile and influenced heavily by circumstances such as weather, disease, supply chain challenges and global strife. So economists look to a “core” index of CPI, which strips out food and energy, as a way to gauge progress on underlying inflation.

Even core moved higher in January: It jumped 0.4% on a monthly basis, bringing the annual rate up to 3.3% from 3.2%.

Inflation has slowed significantly since hitting a 40-year high in 2022. However, prices are still rising faster than Americans were used to in the decade before the pandemic, underscoring the challenges ahead for President Donald Trump.

This story is developing and will be updated.