January inflation rises more than anticipated

Inflation in January rose more than anticipated, meaning there is less incentive for the Federal Reserve Bank to make any further interest rate cuts.

The consumer price index, which measures the costs of goods and services, increased to a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 3%, according to the Bureau of Labor Statistics. Dow Jones estimates were for 0.3% and 2.9%.

Excluding volatile food and energy prices, CPI rose 0.4% on the month, putting the 12-month inflation rate at 3.3%, compared to estimates of 0.3% and 3.1% respectively.

BLS pointed out that shelter costs are a driving factor for inflation, increasing 0.4% for the month and accounting for almost 30% of the entire increase.

Food prices, boosted by a 15.2% surge in egg prices, rose 0.4%. BLS said this was the largest increase in egg prices since June 2015, and was responsible for about two-thirds of the increase in food at home prices. Overall, egg prices are up 53% in the last 12 months.

The medical care services category was flat for the month with no increase, and up 2.7% year over year. Medical commodities were up 1.2% in January and 2.3% year over year.