• New CPI data showed inflation heated up at the start of the year.
• CPI increased 3% in January from a year ago, higher than the 2.9% forecast.
• On Tuesday, Fed chair Jerome Powell said that the economy is strong and the US isn't in a recession.

In January, inflation unexpectedly accelerated.

The consumer price index rose 3% from a year ago, data published Wednesday showed. That's above December's rate and the consensus expectation, both of which were 2.9%.

The CPI increased 0.5% over the month in January from December, above the forecast of 0.3% and recent month-over-month increases.

Core CPI, which excludes volatile food and energy prices, increased 3.3% in January from a year ago, above the forecast of 3.1%. It also rose 0.4% over the month, greater than the forecast of 0.3%.

Egg prices soared 15.2% in January from just a month prior and 53% year over year.

Rising rents and home prices continue to be stubborn problems. Shelter prices were up 0.4% over the month — a tick up from the previous month's 0.3% increase — and 4.4% over the year. BLS noted that the increase in housing prices accounted for "nearly 30 percent of the monthly all items increase."

Energy prices were up 1.1% over the month, largely powered by a 1.8% increase in gas prices.

The new data means inflation has heated up for four straight months.

"We want to see inflation move down, not up," Mark Hamrick, Bankrate's senior economic analyst, said in a statement to Business Insider before the new data was published.

Fed chair Jerome Powell said Tuesday in his regular semiannual testimony before the Senate Committee on Banking, Housing, and Urban Affairs that the economy is strong and the US isn't in a recession.

"Labor market conditions have cooled from their formerly overheated state and remain solid," Powell said. "Inflation has moved much closer to our 2% longer-run goal, though it remains somewhat elevated."

CME FedWatch showed after the report a 97.5% chance of a hold in interest rates at the next scheduled Federal Open Market Committee meeting in March, up from 95.5% before the report. The FOMC held rates steady at its first scheduled 2025 meeting in January.

US 10-year treasury yields were up after the report, and stock futures slid.

The jobs report on Friday showed cooler job growth in January than expected, but unemployment cooled from 4.1% in December to 4%, and wage growth held steady.

"We're seeing economic activity staying healthy, and as a result of that, it takes a little bit of the urgency off of the Federal Reserve," Cory Stahle, an economist at the Indeed Hiring Lab, said after the jobs report was published on Friday.

This is a developing story. Please check back for updates.

• Trump's new tariff plans are in officially in action.
• They're more expansive than his first term, sweeping across industries and countries.
• Trump said that Americans might feel "some pain" with tariffs, but it's worth it to achieve US policy goals.

President Donald Trump's trade war has begun — and it's more expansive than his first time in the White House.

What makes Trump's current strategy unique is its scale. His first-term trade policies were more targeted than the sweeping tariffs across countries and industries this time around. Retaliation from China has been swift, with other countries promising action if Trump follows through on additional threats.

The trade tit-for-tat could spike costs for many goods people use every day, like medicine, cooking utensils, staple grocery items, automobiles, and appliances.

Business Insider examined data from the Tax Foundation and Peterson Institute for International Economics to compare in the table below trade actions taken by Trump during his first term with those in his second and corresponding retaliation.

While tariffs are common practice across countries and administrations to regulate the flow of goods and prop up local industries, Trump has a different approach. He's used them as a bargaining tool in both his first and second terms in an effort to achieve concessions from other countries toward his policy goals, such as strengthening the US-Mexico border.

"One goal isn't actually to go through with the tariffs," Mark Jones, a professor of political science at Rice University, said, "It's to change the behavior of another country."

Still, Trump has already followed through on two of his threats: sweeping tariffs on all Chinese imports and on steel and aluminum from any country. As a result, Jones said that Americans could begin seeing higher prices in as soon as six months because US businesses will have to pay a higher price, or will be unable to recreate foreign goods. For this reason, Jones said, the president's goals may be in conflict.

"On one hand, he wants to impose tariffs to protect American industry and to fight back against what he would consider to be unfair trade practices," Jones said. "On the other hand, he wants to bring down inflation in the United States. Those two policy agendas are, in some ways, mutually exclusive."

Trump's tariff playbook 2.0

Trump's first-term tariffs initially affected about $380 billion worth of imports, which is about 1.8% of America's GDP, Erica York, vice president of federal tax policy at the Tax Foundation, said.

In comparison, Trump's threatened tariffs on Canada and Mexico, and the imposed ones on China, would impact $1.4 trillion of imports, or 4.7% of GDP.

"That's before we consider the promised reciprocal tariffs," York said, referring to statements from Canada, Mexico, the European Union, and others that they would retaliate in the event of tariffs against them. Those reciprocal tariffs would hit US exports, potentially undermining the very industries the US tariffs are trying to support.

"In the face of those higher prices, businesses are likely to do some combination of passing higher costs along to final consumers and cutting back on employment and investment," she added.

Jones said that the result of quick inflation and price increases could be that Americans "feel poor. Their salaries will not be going up, but they will be paying more for the same goods that they normally buy, or they won't be able to buy them."

To be sure, most presidential administrations — regardless of party — have imposed tariffs. Beyond being a source of revenue for the government, tariffs encourage foreign producers to keep their prices low enough to compete with domestically made products.

The White House released a fact sheet on February 11 saying that Trump's tariffs will strengthen America's manufacturing and called tariffs "an effective tool for achieving economic and strategic objectives." Trump acknowledged earlier in February that Americans would feel "some pain" as a result of his tariffs, but added that the pain will be worth it if the US achieves its policy goals.

Additionally, tariffs on China from Trump's first term and kept in place by former President Joe Biden yielded some positive results, Ryan Hass, the director of the John L. Thornton China Center at Brookings, wrote in a February blog post. He said that the tariffs allowed the administration to "push back against Chinese transgressions" and strengthen American competitiveness.

Economists and policy researchers BI spoke with agree that Trump's second-term tariffs are a step up from his previous playbook. Many of the president's first-term levies were smaller, touched fewer industries, or were never enforced.

Throughout 2018 and 2019, the president placed 10% and 25% tariffs on hundreds of billions of dollars worth of Chinese products — including tech equipment and plastics. The tariff strategy resulted in a multibillion-dollar tax increase on goods and a reduction in trade between the two countries, per The Tax Foundation. China responded in 2019 by placing 10% retaliatory tariffs on $75 billion worth of US imports.

Trump also imposed and repealed metals tariffs on Canada throughout his first term, but did not apply sweeping tariffs. His last attempt to impose a tariff on aluminum was scrapped in the summer of 2020 to avoid retaliation from Canada. The White House also threatened a 5% tariff on $346.5 billion of imports from Mexico in 2019 as a means to curb immigration, but the tariffs were soon "indefinitely suspended" and never enforced.

With such broad tariffs on the table in Trump's second term, Jones said the strategy may not be worth the potential positives. He added that the president's first-term tariffs did not have tangible benefits for Americans' wallets, and the scaled-up 2025 plan could come at an undue cost for domestic businesses, consumers, and economic growth.

"There is a place for tariffs in the global economy," Jones said. "But an overreliance on tariffs simply to protect the domestic industries only ends up harming the economy."

• Trump has proposed 25% tariffs on imports from Canada, China, and Mexico.
• Trump said he doesn't "believe" the tariffs would cause price increases at home.
• But, he told Kristen Welker on NBC's "Meet the Press" on Sunday, "I can't guarantee anything."

President-elect Donald Trump, in an NBC News interview that aired on Sunday, said he doesn't "believe" his tariff proposal will raise consumer prices for American families but stopped short of making a promise.

"I can't guarantee anything," Trump told "Meet the Press" moderator Kristen Welker in his first major network television interview since the November general election. "I can't guarantee tomorrow."

Trump then said that before the COVID-19 pandemic, he placed tariffs "on a lot of different countries."

"We took in hundreds of billions of dollars and we had no inflation," the president-elect told Welker. "In fact, when I handed it over, they didn't have inflation for a year and a half."

Trump in November floated 25% tariffs on imports from Canada, China, and Mexico, the top three trading partners of the United States. The president-elect has criticized what he says is the free flow of drugs and illegal migrants into the United States from the three countries.

Late last month, Trump also threatened economic sanctions against the BRICS group, a bloc of nine emerging market countries. He said he would institute "100% tariffs" if they sought to "move away" from the US dollar.

Trump, while on NBC, reiterated that he's a "big believer in tariffs" — calling them "beautiful" — and said the United States is subsidizing Canada and Mexico.

"If we're going to subsidize them, let them become a state," the president-elect said. "We're subsidizing Mexico, and we're subsidizing Canada, and we're subsidizing many countries all over the world. And all I want to do is have a level, fast, but fair playing field."

Late last month, Prime Minister Justin Trudeau of Canada traveled to Mar-a-Lago to dine with Trump after his tariff threats. Trudeau later said he had an "excellent conversation" with the president-elect.

Mexican President Claudia Sheinbaum also described her recent conversation with Trump as "excellent," stating that the two discussed her country's plans for migration.

The economy was a top issue for voters in the November election, with Trump defeating Vice President Kamala Harris largely due to dissatisfaction with President Joe Biden's handling of inflation. Harris sought to define her economic plan — zeroing in on price gouging and tackling housing affordability — but she could not reverse Trump's advantage on the issue.

Across the United States, Trump cut into traditional Democratic advantages with working-class voters and minority groups, with many siding with him at the ballot box over his focus on inflation.