U.S. consumer prices rose faster than expected in January in a sign progress on inflation may remain stalled, data showed on Wednesday, as Federal Reserve Chair Jerome Powell heads to the U.S. Congress for a second day of testimony.
Rising prices for housing, food and energy pushed the Consumer Price Index up at a three per cent annual rate in January versus 2.9 per cent the month before.
The change in the Consumer Price Index was slightly above analysts’ expectations, and is likely to bolster reluctance at the Fed to cut interest rates any further as policymakers wait for signs that price pressures in the economy will continue to ease.
The jump in consumer staples, with gas prices up 1.8 per cent over the month and food at home up half a percentage point, could also feed into public expectations about inflation that the Fed feels are important to control.
Powell appears today before the House Financial Services Committee at 10 a.m. Eastern (1500 GMT) and typically would repeat the same opening statement delivered in a Tuesday hearing before the Senate Banking Committee.
Inflation has been the central bank’s top concern since it began to surge in 2021 to the highest levels since the 1980s and prompted the Fed to approve a rapid set of rate increases.
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Inflation has since eased back towards the central bank’s two per cent target.
But after beginning to cut rates last year the Fed has since moved to the sidelines with policymakers saying they are prepared to stay on hold until inflation resumes its decline and they get more clarity on the direction of the economy under the new Trump administration.
“We do not need to be in a hurry,” Powell told the Senate Banking Committee in a hearing on Tuesday.
That session strayed far beyond monetary policy as lawmakers questioned Powell about his views on tariffs given the import taxes being rolled out by President Donald Trump, the integrity of the U.S. Treasury’s payments system, and the state of a separate agency, the Consumer Financial Protection Bureau, that may be eliminated by the new administration.
