U.S. core inflation accelerated slightly at the start of the year, in line with expectations, as a rise in services costs more than offset steady goods prices.
The core consumer price index, which excludes often volatile food and energy costs, rose 0.3% from December, the most since August, according to data from the Bureau of Labor Statistics on Friday. At the same time, core CPI rose from last year for the least time since 2021.
The slight acceleration in inflation reflected higher prices for air tickets, personal care, recreation, medical care and communications. However, prices for used cars and trucks, home furnishings and auto insurance fell last month.
Stock futures fluctuated after the report and Treasury yields fell.
January is the month when companies typically adjust prices, and some economists predicted that businesses also passed on more tariff-related costs to consumers last month. While some categories, such as apparel and sporting goods, rose, the report suggests that companies are largely protecting American shoppers.
In addition to recent signs of stabilization in the labor market, Federal Reserve officials will likely want to see further developments in inflation before cutting interest rates. Traders see roughly equal chances that the central bank will next cut borrowing costs at its June meeting after three straight cuts at the end of 2025.
With the latest data, the Bureau of Labor Statistics has also incorporated new seasonally adjusted factors, with data for the previous five years subject to revision. The agency also adjusts the relative importance of the individual price categories that make up the CPI.