Price growth unexpectedly accelerated in January, raising an early challenge to the economic agenda of President Donald Trump.
Inflation for so -called central articles, which exclude volatile food and energy prices, rose 3.3% in the last 12 months, the office of labor statistics reported Wednesday, above economists’ economists. 3.2%expectations. Monthly, the inflation measure increased by 0.4%, exceeding the forecasts for 0.3%.
Trump recovered the White House that promised at the lowest prices “immediately”, the promising voters in the campaign that would begin to do it “starting the first day.” While the last report survey period does not cover their first weeks in office, new data show that the challenge of decelerating prices growth could be more difficult than Trump and many economists expected.
Egg prices shot more than 15%, the largest jump since 2015, largely fed by an avian flu outbreak. Housing costs, vehicle insurance, air rates and education prices also increased.
The markets fell, and the Dow fell about 400 points in the market prior to the market. The loan costs represented by the 10 -year -old United States Treasury bonus.
In recent months, the Federal Reserve has maintained high interest rates to keep inflation at bay. But just before the launch of the report, Trump wrote on his social platform of truth: “Interest rates should go down, something that would go hand in hand with the next rates! Lets Rock and Roll, America!”
While reducing interest rates would give consumers and companies more space to spend and invest, it could risk rekindling inflation.
However, at least a Trump economic advisor has pointed out that the administration can seek to stop general consumption, which would probably imply a deceleration in growth and even increase unemployment. Kevin Hasett, director of the National Economic Council, told CNBC on Monday to reduce demand and increase labor supply could address the rhythm of price growth.
Until now, the markets have ignored those comments. On the other hand, many investors have focused on the uncertainty that Trump has created through its commercial policies. On Monday, he announced that he would impose 25% tariffs on all imports of steel and aluminum, a movement that some companies have warned would trigger price increases. Last month, Trump announced an additional 10% tax in all China’s assets, which quickly implemented retaliation rates.
“We continue to believe that the Trump Commercial, Fiscal and Immigration Policy Agenda would be slightly inflationary,” Bank of America analysts said in a new note to customers.
The president of the Federal Reserve, Jerome Powell, said on Tuesday that the economy was “strong in general”, and the Central Bank had made “significant progress” towards the inflation of the fight against its objective of 2% in the last two years . He told the Senate that the Fed is well positioned to adjust interest rates depending on how economic growth evolves, but indicated that it is prepared to keep them higher for longer.
“If the labor market weaken unexpectedly or inflation fell more quickly than expected, we can relieve politics accordingly,” Powell said.
Neil Dutta, Chief of Economic Research of the Renissance Macro consulting, said in a recent note that Trump’s uncertainty is overrated compared to other imminent restrictions on growth. Consumers have reduced their savings and are approaching a natural limit, he said. Meanwhile, public sector spending slows down, not only for federal policies but also as states face increasing budgetary restrictions.
“Uncertainty is increasing while the economy is slowing down,” Dutta wrote.
