By Lucia Mutikani
February 28, 2025 – 7:30 AM PST
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WASHINGTON (Reuters) – U.S. consumer spending unexpectedly fell in January while the annual increase in inflation slowed, supporting financial market expectations that the Federal Reserve would resume cutting interest rates in June.
But the moderation in annual inflation, which partly reflected last year’s high readings dropping out of the calculation, is unlikely to be sustained as President Donald Trump’s administration ratchets up tariffs on imports, which economists warned would raise prices. Consumers’ one-year inflation expectations soared in February.
“The good news is consumer inflation broke the curse of the January effect,” said Christopher Rupkey, chief economist at FWDBONDS. “The bad news is consumers are scrambling to process the winds of change…
