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Inflation reaccelerated in January, as measured by the Federal Reserve’s preferred inflation gauge, Barron’s reports.

What’s going on: “The core personal consumption expenditures price index, which excludes the volatile costs of food and energy, increased 0.4% on a monthly basis in January. That’s compared to registering just 0.1% in a revised December rate. The reported increase was in line with expectations.”

• Year over year, core PCE in January increased 2.8%, down slightly from December’s 2.9% pace (though inflation was higher in 2023).
• These data are in keeping with last month’s consumer price index, which showed an increase in the cost of goods and services in January.

Earnings are up: However, wages and salaries also rose in January, 0.4%, according to the Bureau of Economic Analysis.

• In the past 12 months, manufacturing wages and salaries have risen 4.1% year over year, and overall wages and salaries have risen 5.7%.

Why it’s important: “February’s data will be critical to confirming whether last month was simply a one-off or a concerning trend that could prompt the central bank to delay cutting interest rates, or even begin to consider whether it might need to raise them again.”