US January Consumer Price Index Surges to 3% for the First Time in Six Months

0.5% ↑ from Previous Month…Exceeds Expectations

Caution on Rate Cuts Likely to Spread Further

The U.S. Consumer Price Index (CPI) for January surpassed market estimates, showing a strong upward trend. Analysts suggest that the higher-than-expected figures have dampened expectations for a rate cut by the Federal Reserve (Fed), increasing the likelihood of prolonged tightening.

According to the U.S. Department of Labor's announcement on the 13th, the January CPI rose by 3.0% year-on-year, up 0.1% from the previous year. This result exceeds the market expectation of 2.9%. The month-on-month increase was also 0.5%, higher than the expected 0.3%.

The core CPI, excluding the volatile energy and food prices, also exceeded market forecasts at 3.3%, suggesting a potential reversal in the trend of slowing inflation. Particularly, the continued rise in housing and service sector prices indicates that inflation has not yet eased.

The market anticipates that the Fed's rate cut may be delayed. According to the Chicago Mercantile Exchange (CME) FedWatch, the probability of the Fed cutting rates at the upcoming Federal Open Market Committee (FOMC) in May is 20.7%, slightly down from the previous estimate of 21.3%. Jerome Powell, the Fed Chair, stated at the Senate hearing the previous day, "There is no need to rush to lower the benchmark rate while the U.S. economy continues strong growth and inflation exceeds the target of 2%."

Meanwhile, U.S. President Donald Trump has pressured for a rate cut. In a post on Truth Social, a social media platform he founded, President Trump emphasized, "Rates should be lowered," adding, "This will proceed along with upcoming tariffs."

Reporter Lee So-hyun y2eonlee@hankyung.com