US consumer prices rose more than expected in January, according to the latest data from the Bureau of Labor Statistics released Tuesday morning.
The Consumer Price Index (CPI) rose 0.3% over last month and 3.1% over the prior year in January, slightly higher than December’s 0.2% month-over-month increase but a deceleration from December’s 3.4% annual gain.
Both measures were higher compared to economist forecasts of a 0.2% month-over-month increase and a 2.9% annual increase, according to data from Bloomberg.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in January climbed 0.4% over the prior month and 3.9% over last year.
Investors had been closely watching the print for clues on when the Federal Reserve will begin cutting interest rates. Markets are now pricing in a nearly 80% chance the Fed cuts rates in June, bucking previous expectations that the central bank would begin cutting rates in May.
Stocks moved lower in early trading following the report while the yield on the 10-year Treasury note ticked about 10 basis points higher to trade near 4.3%.
Notable call-outs from the inflation print include the shelter index, which rose 6% on an unadjusted, annual basis and 0.6% month-over-month. The index rose 0.4% on a monthly basis in December.
Sticky shelter inflation is largely to blame for higher core inflation readings, according to economists.
The index for rent and owners’ equivalent rent rose 0.4% and 0.6% on a monthly basis, respectively. Owners’ equivalent rent is the hypothetical rent a homeowner would pay for the same property.
Other indexes that rose in January included motor vehicle insurance and medical care. The index for used cars and trucks and the index for apparel were among those that decreased over the month, the BLS noted
The food index increased 2.6% in January over the last year, with food prices rising 0.4% from December to January. The index for food at home increased 0.4% over the month after rising just 0.2% in December.
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Food away from home rose 0.5% month-over-month after rising 0.3% in December.
Energy prices, meanwhile, continued to fall, declining 4.6% annually and 0.9% month-over-month.
Fuel oil led the drop with prices decreasing 4.5% from December to January. Gas prices ticked down 3.3% month-over-month after falling just 0.6% in December.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].
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