US January Consumer Price Index Rises 6.4%, Exceeding Expectations (Update)

US January CPI Rises 6.4%... Exceeds Market Expectations

[Asia Economy Reporter Koo Chae-eun] In January this year, the US Consumer Price Index (CPI) rose 6.4% compared to a year earlier. This figure exceeded Bloomberg News' forecast (6.2%), raising concerns about interest rate hikes.

On the 14th (local time), the US Department of Labor announced that consumer prices in the US increased by 6.4% last month compared to January of the previous year. By category, food (10.1%) and energy (8.7%) showed notable price increases. Transportation services (14.6%) also experienced high inflation rates.

In January alone, gasoline surged 2.4%, natural gas jumped 6.7%, causing energy costs to rise by 2%. Housing costs, which account for a large portion of consumer prices, increased by 7.9% year-on-year, driving overall inflation.

[Image source=Yonhap News]

Core CPI, which excludes the volatile energy and food sectors, rose 5.6% in January compared to January last year. This is a 0.1 percentage point decrease from the US core inflation rate in December last year (5.7%). The US price index also rose 0.5% month-on-month last month.

As inflation concerns increase, the possibility of raising the benchmark interest rate by more than 25 basis points (1bp = 0.01 percentage points) at the Federal Open Market Committee (FOMC) regular meeting scheduled for February 21-22 has also increased. If this happens, the benchmark interest rate will rise from 4.5-4.75% to 4.75-5.0%.