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The latest economic data showed that inflation continued to rise, sending stocks tumbling in early market trading on Tuesday (February 14).
The consumer price index increased by 0.5% over the past month, which was higher than many economists were anticipating. Year-over-year, the CPI is up by 6.4%.
The core consumer price index, which removes volatile food and energy prices, increased by 0.4% month-to-month and 5.6% over the last year.
The Bureau of Labor Statistics said the higher-than-expected increase was driven by increasing shelter costs and higher energy prices. Shelter costs accounted for about one-third of the CPI and jumped by 0.7% from December to January. Over the past year, shelter costs have risen by 7.9%.
The month-to-month cost of energy jumped by 2%, while energy costs are 8.7% higher than they were last year.
Investors are concerned about how inflation will impact the decision-making of the Federal Reserve as it considers more interest rate hikes to bring inflation under control.
“Inflation is easing, but the path to lower inflation will not likely be smooth,” Jeffrey Roach, chief economist at LPL Financial, told CNBC. “The Fed will not make decisions based on just one report, but clearly, the risks are rising that inflation will not cool fast enough for the Fed’s liking.”