An Inflation Surprise Hits the Market

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You know that Bidenflation has taken a toll on America. Now, inflation is down, but it’s not out. A new report on CPI released this morning recorded slower inflation than the previous month but was higher than had been predicted.

But the damage is already done for many on a fixed income. For instance, food prices have already settled in at a whole new level.

Justin Lahart discusses the report in The Wall Street Journal, writing:

Inflation cooled again in January, but the declines may have paused.

The Labor Department reported Tuesday that consumer prices rose 3.1% in January from a year earlier, versus a December gain of 3.4%. That marked the lowest reading since June. Economists had predicted that price increases would fall to 2.9%.

Core prices, which exclude food and energy items in an effort to better track inflation’s underlying trend, were up 3.9%. That was equal to December’s gain, which was the lowest since mid-2021.

From a month earlier, overall prices were up 0.3%, and core prices were up 0.4%—larger gains than economists expected.

Stock futures fell and bond yields rose after the release, which fueled worries that firmer-than-expected inflation would reduce the probability of the Federal Reserve lowering interest rates in the coming months. Interest-rate futures, which before Tuesday’s report implied the central bank would probably begin cutting rates by its May meeting, now suggest a June start date is more likely.

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