January #CPI Update – What to Expect
Economists are expecting U.S. inflation for January to come in around 0.3% month-to-month and about 2.5% year-to-year. That would be slightly lower than December’s 2.7%, which suggests inflation is slowly cooling.
However, January data often comes in higher than expected. This is known as the “January effect,” where prices tend to rise more at the start of the year.
The U.S. statistics agency will also update its calculation model. This could slightly change past inflation numbers, but it probably won’t remove the January effect.
What it means for markets:
If inflation comes in as expected, it likely won’t change the Federal Reserve’s plan. They are still in a wait-and-see mode on interest rates.
In short:
Inflation is expected to cool slightly, but January numbers can be tricky, and the Fed is not expected to react quickly.