In-line core CPI inflation a relief after recent history of January price spikes
The January CPI report is out.
It’s January, and inflation isn’t surging. That’s good enough.
Data from the Bureau of Labor Statistics shows headline inflation rose 0.2% month on month, while the core measure (which excludes volatile food and energy prices) was up 0.3%.
Both of these numbers are rounded to the first decimal place; to the second decimal point, core was a little softer than anticipated.
The SPDR S&P 500 ETF edged higher following this release. Economists expected headline inflation to rise 0.26% month on month and core inflation to be up 0.34%, per The Wall Street Journal.
Coming into this report, prediction markets indicated that CPI would be between 0.2% and 0.3%, and that there was nearly an 80% chance of the Federal Reserve keeping rates unchanged at its April decision.
(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)
This inflation report has higher stakes than most because it’s for January. In the higher-inflation environment we’ve been living in for the past few years, January has seen outsized price increases.
The thinking here is that the start of the year is a common time to push through price hikes, and these are sufficiently large, and the inflation backdrop is sufficiently different, that these show up and aren’t filtered out by the seasonal adjustment process.
Since the start of 2022 through 2025, core CPI has risen 0.45% month on month in January, versus an average of 0.33% for all months.
