US inflation Beats Expectations, Rises to 3%

U.S. headline inflation rose more than expected in January as core prices reflected last month’s easing, with the Federal Reserve’s path in focus.

The latest data from the Bureau of Labor Statistics showed the consumer price index rose 3.0% from a year earlier in January, up from a 2.9% annual increase in December.

Seasonal factors such as higher fuel costs and continued steady food inflation kept the headline figure elevated.

The index rose 0.5% from the previous month, a slight acceleration from the 0.4% increase seen in December and missing economists’ estimates for a 0.3% increase.

For “core” prices, which strip out the more volatile costs of food and gas, prices rose 0.4% from the previous month in January, up from a 0.2% monthly gain in December and 3.3% from a year ago. This was up from 3.2% seen in December, which was the first time since July that the core CPI showed a slowdown in price growth.

Despite the slowdown, inflation remained above the Fed’s 2% target on an annualized basis.

The rise of Donald Trump to the presidency has further complicated the outlook, with some economists arguing that the US could face another surge in inflation as Trump commits to a protectionist trade policy. That is likely to complicate the central bank’s path forward on interest rates.

President Trump announced on Monday that he would impose a global 25% tariff on steel and aluminum imports, which will take effect on March 12. Mexico and Canada are set to be hit with 25% tariffs next month, while a 10% tariff on China has already been implemented.