Announced this morning, the Consumer Price Index (a measure of inflation) increased 0.5% in January, more than the 0.3% expected, and has increased 2.1% annually. The core rate, which excludes food and energy costs, increased 0.3% in January, also more than the 0.2% expected, and has increased 1.8% annually. The fact the monthly figures were higher than expected is noteworthy, given the sizeable increase in average hourly earnings in January’s jobs report. It could be a sign that inflation may be returning and could trigger the Federal Reserve to increase interest rates at a faster pace than previously communicated which would create some headwinds for the economy. However, recent data points continue to indicate the economy remains on stable ground. Equity futures turned lower and interest rates went higher following the announcement, as the markets digest the data.
Senior Vice President
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