US Inflation Climbs to 3.1 Percent in January, Jeopardizing Expected Interest Rate Cuts
Washington, D.C., Friday, 13 March 2026.
US consumer prices unexpectedly accelerated to 3.1 percent in January 2026. This stubborn inflation erases recent economic progress and threatens to delay the Federal Reserve’s anticipated interest rate cuts.
Dissecting the January Inflation Data
Data released on Friday by the Commerce Department’s Bureau of Economic Analysis showed the Core Personal Consumption Expenditures (PCE) price index—which excludes volatile food and energy components—rose by 0.4% on a monthly basis in January 2026 [2][3]. This monthly core reading aligned exactly with market forecasts, an outcome that currency analysts anticipate will have a neutral immediate impact on the U.S. dollar [1]. On an annual basis, however, core PCE climbed to 3.1%, marking its highest level since March 2024 and remaining persistently above the Federal Reserve’s 2.0% target [5][6][8]. The broader headline PCE index, which includes all consumer costs, increased by 0.3% from the previous month and registered a 2.8% gain over the past year [3][5].