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Consumer prices rose an “unexpected” 3.1% in January, which is down from 3.4% in December but significantly higher than the 2.9% that was predicted.
Taking out the volatile food and energy prices, inflation actually rose 3.9% compared to last year.
The Federal Reserve Board has been very timid about cutting rates. This is the reason why. In past battles against high prices, the Fed has learned from hard experience that cutting interest rates too much, too soon, can start the inflationary spiral all over again.
“They were right to be patient, because this is the kind of number that is going to cast doubt on whether there really is a lot of deceleration in store for inflation,” said Omair Sharif, founder of Inflation Insights. “This is definitely a spooky number.”
Fed Chair Jerome Powell wonders if the moderating inflation numbers are real or a mirage.
“Is it sending us a true signal that we are, in fact, on a path — a sustainable path — down to 2 percent inflation?” Powell asked during his Jan.
