Inflation picked up pace in January, according to data released on Wednesday, adding pressure on the new administration to fulfill its key campaign promise of reducing prices “on day one,” while uncertainty looms regarding the potential effects of President Trump’s economic policies.
The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose by 0.5 percent from December to January, surpassing the previous month’s 0.4 percent and exceeding the consensus expectation of 0.3 percent. The annual CPI for the 12 months ending in January climbed to 3.0 percent, slightly above analysts’ forecast of 2.9 percent, which matched December’s level.
The core inflation rate, which excludes volatile categories like food and energy, also exceeded expectations, increasing by 0.4 percent in January compared to a 0.2 percent rise in December. This was above the forecasted 0.3 percent. On an annual basis, core inflation reached 3.3 percent, a slight increase from 3.2 percent the month before, and above the anticipated 3.1 percent.
These inflation figures, which came in higher than expected, suggest that the U.S. is still grappling with inflation. Much like the recent disappointing jobs report, the White House may use the data to highlight the lasting impact of Biden-era policies. However, the numbers are also likely to ramp up pressure on the new administration, which has made fighting inflation a key priority.
The data could also influence the Federal Reserve’s next steps regarding interest rates, as the Fed kept rates steady following a series of cuts in late 2024. Despite calls for immediate reductions from President Trump, Fed Chair Jerome Powell has emphasized the need to maintain the current approach until the full effects of the new administration’s economic strategies are clearer.
This inflation reading, the first for 2025 and the first since Trump returned to office, is expected to provide insight into how his key policies—such as tariffs, tax cuts, and immigration restrictions—may impact inflation going forward.
The Bureau of Labor Statistics also reported that the shelter index rose 0.4 percent in January, with rent contributing nearly 30 percent of the overall monthly CPI increase. Energy prices climbed 1.1 percent, driven by a 1.8 percent jump in gasoline costs. The food index increased by 0.4 percent, with food at home rising 0.5 percent and food away from home up 0.2 percent.
Over the 12 months ending in January, energy costs increased by 1.0 percent, while food prices went up by 2.5 percent.
Egg prices, a significant inflation concern for many Americans, surged by 15.2 percent from December to January. This marked the largest increase in egg prices since June 2015 and accounted for about two-thirds of the total increase in food prices at home.
Reducing the cost of goods in the U.S. was a key promise during President Trump’s campaign, with the president vowing to lower prices “on day one” of his administration. However, the latest inflation report suggests that the administration may need to adjust its inflation promises.
Vice President JD Vance, speaking to CBS, expressed confidence that the new administration could bring prices down, but acknowledged that this would take “some time.”
“BIDEN INFLATION UP!” President Trump posted on Truth Social shortly after the inflation data was released.
In a December interview with Time magazine, President Trump remarked: “Look, they got [prices] up. I’d like to bring them down. It’s hard to bring things down once they’re up. You know, it’s very hard. But I think that they will. I think that energy is going to bring them down. I think a better supply chain is going to bring them down.”
