U.S. inflation climbed to 3% in January, up from 2.9% in December, driven by higher grocery, gas, and rent prices. The increase complicates the Federal Reserve’s plans for interest rate cuts, with Chair Jerome Powell reaffirming a cautious approach.
Core inflation, excluding food and energy, rose 3.3%, while monthly inflation saw its largest jump since August 2023. Egg prices surged 15.2% due to avian flu, and car insurance, hotels, and gas also became more expensive. Higher tariffs proposed by former President Donald Trump could further elevate prices.
Economists warn inflation’s persistence may slow business investment and hiring. While some forecasts predict inflation will ease, Powell cautioned that additional tariffs could limit the Fed’s ability to cut rates in the near future.
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