Inflation Surges in the U.S., Raising Concerns Over Fed’s Rate Policy

Washington, D.C. (February 13, 2025) – U.S. consumer prices surged in January, marking the sharpest increase in nearly a year and a half, as the cost of shelter, food, and gasoline spiked. The unexpected inflation jump has reinforced the Federal Reserve’s cautious stance on cutting interest rates.

The Consumer Price Index (CPI) rose 0.5% last month, the highest since August 2023, after a 0.4% increase in December. Year-over-year, inflation climbed to 3.0%, fueled by rising grocery prices—including a staggering 15.2% surge in egg prices—while gasoline costs increased by 1.8%. Core inflation, which excludes food and energy, also ticked up 0.4%, indicating broad price pressures.

The report has dampened hopes for an interest rate cut, with Fed Chair Jerome Powell stating that inflation remains stubbornly above the central bank’s 2% target. Meanwhile, Wall Street reacted negatively, with stocks slumping and Treasury yields rising as investors recalibrated expectations for monetary policy.

Adding to inflationary risks, President Donald Trump’s recent tariff policies, particularly on Chinese goods, could further push up prices. Economists warn that inflationary pressures may persist, potentially altering the Fed’s easing cycle and shaping the economic landscape for the months ahead.

Source: Reuters