Inflation saw a surprising uptick in January, strengthening the Federal Reserve’s resolve to maintain interest rates.

According to the Bureau of Labor Statistics, the consumer price index (CPI)—a comprehensive gauge of goods and services prices across the U.S.—rose by a seasonally adjusted 0.5% for the month. This increase brought the annual inflation rate to 3%, surpassing the Dow Jones forecast of 0.3% and 2.9% for the year.

When excluding the unpredictable prices of food and energy, the CPI still rose by 0.4%, indicating a 12-month inflation rate of 3.3%, which was again above estimates of 0.3% and 3.1%.

Rising shelter costs remain a persistent issue, increasing by 0.4% this month and contributing to approximately 30% of the overall inflation rise, according to BLS data.

Food prices also experienced a notable jump of 0.4%, primarily driven by a significant 15.2% increase in egg prices. This surge is linked to ongoing challenges related to avian flu, which has led farmers to cull millions of chickens. This marks the largest spike in egg prices since June 2015 and accounted for around two-thirds of the rise in grocery prices. Over the past year, egg prices have escalated by an astonishing 53%.

In response to this economic news, markets reacted sharply, with futures for the Dow Jones Industrial Average dropping more than 400 points, while bond yields surged dramatically.

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