Based on the data released by the Bureau of Labor Statistics today, the Consumer Price Index (CPI) in the USA rose 0.3% over the previous month and 3.1% over the prior year in January, slightly higher than December’s 0.2% month-over-month increase but a deceleration from December’s 3.4% annual gain.
Stock quotations are negatively influenced by this information today, because the two measures are higher compared to economist forecasts of a 0.2% month-over-month increase and a 2.9% annual increase.
The Core Consumer Price Index, which excludes the more volatile energy and food prices and is generally considered a better gauge of underlying trends, rose by 3.9%, the same pace seen in December and above the 3.7% economists forecasted.
This report is a disappointment for the investors who expected inflation to edge lower, allowing the Fed to begin easing rates sooner.
Markets are now pricing in 80% chance that the Fed cuts rates in June, back for the previous bets that May will be the first month when the Central Bank will reduce the interest rate.