Egg prices climbed more than 15% in January. (istock))
Annual inflation increased to 3% in January, increasing above expectations and giving the federal reserve an additional reason to slow down interest rate reductions.
Inflation increased by 0.5% per month, slightly exceeding expectations and above the Increase in the previous month of 0.4%According to the consumer price index (ICC) Released by the Bureau of Labor Statistics (BLS). The basic ICC, which excludes food and energy, increased by 0.4% in January, reaching the same level as the December increase. This brought the rate from one year to 3.3%.
The costs of shelters increased by 0.4% and were the largest contributor to the monthly increase in January, representing almost 30% of the monthly increase in all the elements. Gas increased by 1.8% over the month. Food prices continued to increase, increasing 0.4% last month. The Food at Home index increased by 0.5%, mainly driven by the outbreak of egg costs, which increased by 15.2% in January.
“The unexpected acceleration of inflation marks the third consecutive monthly increase in the consumer price index and has been extending a reflationary trend for two consecutive stable months for the index in May and June 2024,” said Jim Baird, Plante Moran Financial Advisors, the director of investments for advisers ,,,,,, said Jim Baird, Plante Moran Financial Advisors. in a declaration. “In a context of solid demand, inflation has accelerated. It is a reality that can scare consumers who remember too well from the price of the COVVI-19 era.
“This will also make import prices offered by President Trump a more difficult sale than was the case during his first mandate, when inflation and interest rates were exceptionally low,” said Baird.
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The increase in inflation, combined with a market for stable jobs and economic growth, has given the federal reserve more space for work.
The Federal Reserve held interest rates from 4.5% to 4.75% In January, caused by solid economic indicators which gave the central bank more space to wait. The president of the federal reserve, Jerome Powell, said that the central bank intends to remain cautious about the drop in additional rates as long as the labor market remains solid and that prices continue to climb.
“The darkness of the evolution of trade policy creates an important unknown for the political decision -makers of the Fed which will face the potential political challenges of more slow growth and higher inflation,” said Baird. “While even the lowering forecasts are far from the stagflationist environment of the 1970s, the game book will apparently apply.
“The ending of inflation should remain the priority for the Fed, even to the detriment of short -term growth,” said Baird. “Fear of inflation forecasts does not know too much to ignore it for decision -makers.”
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How much more impact for your wallet
All signs indicate that the interest rates of detention of the Fed are higher longer, which means that consumers will continue to be affected by stubborn interest rates having an impact on a range of products , including credit cards, mortgages, unmarked personal loans and car loans, according to Charlie Wise, main vice-president of research and transunion council.
“Consumers should avoid building and carrying significant credit card sales, in particular very high interest rate light on this type of debt, and each time possible, pay more than the monthly minimums due on Their cards, “said Wise in a statement.
In addition, Wise has indicated that consumers are watching closely on their credit profiles and keep them in the best possible form so that when the rates finally fall to a more manageable level, they are ready to refinance their existing debts on more loans affordable.
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