Consumer prices rose 0.5 percent in January and 6.4 percent annually, according to the Labor Department’s consumer price index.
Economists predicted that prices would rise 6.2 percent, meaning inflation came in hotter than expected. Core inflation, which excludes food and energy prices and is closely watched by the Federal Reserve, didn’t budge.
Tuesday’s report raises the question of whether inflation will keep falling or stagnate at its current pace, a worst-case scenario for the Fed, which wants to bring inflation back down to 2 percent.
The numbers may prompt the Fed to more aggressively slow the economy to reduce demand — even if it means a recession — after recently implementing its smallest interest rate hike since March 2022.
President Biden noted that annual inflation has fallen for seven straight months, and real wages have picked up over that period.
“We are seeing this progress even as unemployment remains at its lowest level since 1969 and job growth remains resilient,” Biden said in a statement following the report’s release.
Republicans see things differently.
Rep. Jason Smith (R-Mo.), chairman of the House Ways and Means Committee, said the report represents an opportunity for Biden to work with Republicans on budget cuts to reduce government spending in an effort to fight inflation.
“Working Americans need relief from President Biden’s ongoing inflation crisis,” Smith said in a statement.
