January CPI Numbers

Inflation ticked up to 3% YoY

The latest Consumer Price Index data reveals a 3% year-over-year increase in January, surpassing December's figures and economist expectations. This development has immediately rippled through the markets, strengthening the dollar and increasing Treasury yields.

What's particularly noteworthy is the timing - January typically sees businesses implement their annual price adjustments, making this report a crucial indicator of inflation trends. The Fed maintained steady rates after a full percentage point cut in 2024, and today's data suggests their cautious approach may be warranted.

Fed Chair Powell's recent Capitol Hill testimony acknowledged "great progress" in the inflation fight, but he also emphasized that we're "not quite there yet." He reinforced that there's no rush to cut rates. Yesterday's data supports a cautionary move forward.

Two categories caught my attention:

• Transportation Services ⬆️ 8.0% YoY

• Shelter ⬆️ 4.4% YoY

The message is clear: While overall inflation progress continues, these two categories could significantly influence the Fed's path forward. Their persistence suggests structural rather than temporary pressures.

As I evaluate the risks for 2025, insurance costs are a major category of concern. Premiums are increasing across the board, and “risky” segments are being dropped from insurance, exposing many to life risks.