Consumer Prices Rise 6.4% in January, Fed Raises Rates to Combat Inflation

Consumer prices rose 6.4% in January, according to the latest consumer price index (CPI) report released by the Labor Department on Tuesday morning.[0] This marks a slight slowdown from the 6.5% seen in December, but still hotter than the 6.2% economists had predicted.[1] Month-to-month inflation ticked up 0.5%, after dropping in December, indicating that overall inflation is still far from tamed.[2]

The core CPI, which excludes food and fuel prices, rose 0.4% for the month as expected and 5.6% for the year, slightly ahead of expectations.[3] This marks the seventh consecutive month of declining annual inflation after the rate peaked at a whopping 9.1% in June.[4]

The shelter index – comprising of rent and housing costs – has seen a year-on-year rise of 7.9%, with a monthly upturn of 0.7%.[5] Half of January’s inflation rate was attributed to this.[5] Food prices rose 10.1% from January of last year, continuing an annual double-digit increase for nine months in a row, though lower than the peak in August.[6]

Federal Reserve officials have noted progress in the bank’s effort to tame prices – with Fed Chair Jerome Powell declaring earlier this month that the “disinflationary process has begun.”[7] However, Powell and his colleagues are likely to keep raising rates, he said, as wage growth is key to the outlook for service-sector inflation.

Revisions show that inflation is cooling less than previously thought, signaling that the most severe inflation in four decades is gradually dissipating.[8] Prices rose 0.5 between December and January — the fastest one-month gain since October of last year — suggesting that inflation is still far from tamed.[0]

Last week, Federal Reserve Chairman Jerome Powell stated that he intends to maintain interest rates at a higher level until inflation nears the 2% target. Powell wants to raise the interest rates to a large extent, so that borrowing and investing become more expensive, thus decreasing the demand in the economy and lowering prices.[9]

The latest Consumer Price Index report does not significantly alter the Federal Reserve’s policy stance.[10] It appears almost certain that the Federal Reserve (Fed) will raise interest rates by a quarter-point in both March and May, as the Fed chooses to be overly cautious in its monetary policy.[10] An increase in borrowing costs can impede economic growth, leading to higher unemployment and increasing the likelihood of a recession.[11]

0. “Inflation rose 6.4% in January” Fox Business, 13 Feb. 2023,

1. “Inflation Fell To 6.4% In January—But Is Still Worse Than Economists Expected As Rent, Food And Gas Prices Keep Rising” Forbes, 14 Feb. 2023,

2. “Inflation is higher than expected at 6.4%, with the ‘most important’ measure remaining elevated” CNBC, 14 Feb. 2023,

3. “Consumer prices rise at faster pace in January” Axios, 14 Feb. 2023,

4. “Inflation was still hot in January, but some prices are cooling off” CNN, 14 Feb. 2023,

5. “Inflation ticks down to 6.4% even as January prices climbed”, 14 Feb. 2023,

6. “Grocery prices remain higher in January, led by eggs and citrus” Yahoo News, 14 Feb. 2023,

7. “Inflation rose 0.5% in January, more than expected and up 6.4% from a year ago” CNBC, 14 Feb. 2023,

8. “Grocery Inflation Slows in January, but Remains High” TIME, 14 Feb. 2023,

9. “January inflation hit 6.4%, missing analysts’ expectations for a faster slowdown” NBC News, 14 Feb. 2023,

10. “CPI Inflation Comes In Hot, Keeping Fed On Guard” Investor’s Business Daily, 14 Feb. 2023,

11. “CPI shows inflation still sticky and slowing grudgingly” MarketWatch, 14 Feb. 2023,