Yesterday’s inflation news from the Consumer Price Index wasn’t what the Federal Reserve and its Chair Jerome Powell wanted to confront. But they had to.

The Consumer Price Index came out. Although not the Personal Consumption Expenses that the central bank prefers, it showed a year-over-year 3% price increase, or 0.5% between December 2024 and January 2025. December’s increase was 2.9%. Core inflation over 12 months was even higher at 3.3%; December was 3.2%.

In his congressional testimony on Tuesday, Powell said, “Inflation has moved much closer to our 2 percent longer-run goal, though it remains somewhat elevated.” Yesterday’s CPI increase was in the wrong direction.