January inflation deflates market confidence

Just like this year’s Midwest winter, inflation didn’t cool as much as expected in January.

The consumer price index (CPI) rose 0.3% in January compared with December. Year over year, the CPI increased 3.1%, which was a smaller increase than the 3.4% observed in December, the Department of Labor announced.

At least that’s an improvement, right? Sure, but it isn’t what market observers expected. Stocks on Wall Street had their worst day in nearly a year after investors saw the latest DOL inflation data, according to CNBC, which reported the Dow Jones Industrial Average fell nearly 525 points, or 1.35%. “Economists polled by Dow Jones expected CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier,” CNBC reported.

The above-expected rate of inflation is “clouding the Federal Reserve’s path to rate cuts,” the Wall Street Journal Wall Street Journal reported. Also, according to the Journal, “some Fed officials have suggested that the pace of improvement over the past six months might overstate underlying progress in containing price pressures.”

But don’t freeze with fear. Inflation remains on a downward trajectory, experts said.

“The CPI was, as reported today, just a touch hotter than expectations and proof positive that we’re not on a linear path, but we’re on a path headed lower,” Art Hogan, B. Riley Financial’s chief market strategist, told CNBC.