Inflation was worse than expected in January, according to the Bureau of Labor Statistics’ consumer price index report released Wednesday morning, with one grocery item contributing noticeably to higher prices.
Egg prices have contributed to more expensive grocery prices for Americans.
Headline annual CPI inflation was 3% last month, compared to consensus economist forecasts of a 2.8% price increase from January 2024 to January 2025, according to Dow Jones.
Consumer prices rose 0.5% from December to January on a seasonally adjusted basis, worse than estimates of a 0.3% month-over-month rise.
The arguably more important measure of core inflation, which excludes price changes in the often volatile food and energy categories, increased 3.3% year-over-year in January, higher than forecasts of 3.1%.
And core prices rose 0.4% from December to January, compared to estimates of 0.3%.
The 0.5% price increase from December to January marked the worst month-over-month inflation since August 2023.
The price of eggs rose 15.2% from December to January on a seasonally adjusted basis, and 53% from January 2024 to last month, as bird flu ravages the national supply of eggs. That helped boost the CPI’s food at home annual inflation sub-index to 1.9%, its highest reading since October 2023. This was the largest increase in egg prices in 10 years, contributing roughly two-thirds of all grocery inflation, according to the government.
Headline inflation was 2.9% and core inflation was 3.2% in December, in line with economist forecasts. Inflation remains well above its widely accepted target of 2%. Still, it’s come down considerably since headline CPI inflation peaked at a four-decade high of 9.1% in 2022, and January was the seventh consecutive month with inflation below 3%. With inflation still above its ideal rate, and concerns about the potential price increases associated with President Donald Trump’s tariffs, the Federal Reserve has distanced itself from enacting further interest rate cuts in the near term, keeping borrowing costs at a historically high level.
Ahead of the CPI release, Trump posted to his Truth Social platform: “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!” Trump previously said he’d “demand” rate cuts, which are determined by the Fed, not the president.