Inflation data readings were unfortunately reported to be higher at the start of 2023 (January), when rising housing, gas and fuel prices hit consumers, the Labor Department reported on Tuesday.
The consumer price index, which measures a broad group of common goods and services, rose 0.5% for the month, which translates to an annual increase of 6.4%. Economists polled by Dow Jones had only expected increases of 0.4% and 6.2%, respectively. However, this reading is slightly slower than December which recorded a reading of 6.5% per year.
Excluding volatile food and energy, core CPI rose 0.4% monthly and 5.6% from a year ago, compared to estimates of 0.3% and 5.5% respectively.
Markets were volatile following the release of this data, with the Dow Jones futures market flat.
Increased coverage costs accounted for about half of the monthly increase, the Bureau of Labor Statistics reported in the report. The component accounts for more than a third of the index and was up 0.7% in the month and up 7.9% from a year ago.
Energy was also a significant contributor, up 2% and 8.7% respectively, while food costs rose 0.5% and 10.1% respectively.
A price increase means a loss in real wages for workers. Average hourly earnings fell 0.2% for the month and were down 1.8% from a year ago, according to a separate BLS report.
Although price increases have moderated in recent months, January data showed that inflation is still a key factor in the U.S. economy. and can lead to a recession this year.
The central bank has raised its benchmark interest rate eight times since March 2022 as inflation rose to a 41-year high last summer. In recent days, Fed Chairman Jerome Powell has talked about the power of "disinflation" being the narrative for now, but January's numbers suggest the central bank may still have more work to do.
The US dollar index traded lower against six major currencies with a 0.44% drop to a trading level of 102.782.
