US inflation picked up broadly at the start of the year, further diminishing chances the Federal Reserve will cut interest rates anytime soon.

The consumer price index rose 0.5% last month, the most since August 2023 and led by a range of household expenses like groceries and gas. Shelter accounted for nearly 30% of the advance, according to the report from the Bureau of Labor Statistics out Wednesday.

Excluding often-volatile food and energy costs, the so-called core CPI also climbed by more than forecast. That reflected higher prices for car insurance, airfares and a record monthly increase in the cost of prescription drugs.

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Wednesday’s report serves as further evidence that inflation progress is in danger of reversing — which, combined with a solid labor market, will likely keep the Fed on hold for the foreseeable future. Policymakers are also awaiting further clarity on President Donald Trump’s policies, particularly tariffs, which are already causing consumer inflation expectations to rise.

The S&P 500 opened lower, while Treasury yields and the dollar spiked. Interest rate swaps showed traders are only expecting one quarter-point Fed rate cut this year. Before the CPI report, traders were leaning toward two cuts.

“We saw strength across the board — whether you’re looking at energy, food, within core components — and so I think it points to a price environment that still remains difficult as far as the Fed is concerned,” said Sarah House, a senior economist at Wells Fargo & Co. “So for how long you expected the Fed to be on hold going into this report, I think this only lengthens that time frame.”

Earlier Wednesday, Trump again called for lower interest rates and later suggested the inflation numbers were due to his predecessor, President Joe Biden.

Fed Chair Jerome Powell is due to speak before the House this morning. On Tuesday, he told a Senate committee that the central bank is in no rush to cut rates. While Powell wouldn’t comment on trade policy, he said that he and his colleagues will have to consider the “net effect” on the economy of all the administration’s policies, including taxes and immigration.

The increase in the CPI was led by grocery prices, with two-thirds of that advance due to higher egg prices in the wake of a deadly bird flu outbreak. The more-than 15% jump was the largest since June 2015. Costs of hotel stays and used cars also climbed, possibly in the aftermath of severe wildfires in Los Angeles.

The report incorporated new weights for the consumer basket to try to more accurately capture Americans’ spending habits, which resulted in minimal revisions to the CPI last year. Some economists and Fed officials have noted how inflation tends to come in higher early in the year when businesses implement outsize price increases.

Shelter prices, the largest category within services, advanced 0.4% in January. Owners’ equivalent rent and rent of primary residence — subsets of shelter — both rose 0.3%.

Excluding housing and energy, service prices jumped 0.8%, the most in a year, according to Bloomberg calculations. While central bankers have stressed the importance of looking at such a metric when assessing the overall inflation trajectory, they compute it based on a separate index.

That measure — known as the personal consumption expenditures price index — doesn’t put as much weight on shelter as the CPI, which helps explain why it’s trending closer to the Fed’s 2% target. A government report on producer prices due Thursday will offer insights on additional categories that feed directly into the PCE, which is due later this month.

Goods costs excluding food and energy rose by the most since May 2023. However, when removing used cars, the index was little changed.

Policymakers also pay close attention to wage growth, as it can help inform expectations for consumer spending — the main engine of the economy. A separate report Wednesday that combines the inflation figures with recent wage data showed real hourly earnings grew 1% from a year ago.

(With assistance from Chris Middleton, Matthew Boesler, Ye Xie and Reade Pickert.)