Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news and analysis.

Happy Mardi Gras. Today is Tuesday, February 13th, and I'm your host Kim Khan.

Our top story so far.

The Bureau of Labor Statistics put a damper on one of the biggest party days of the year, at least

for Wall Street. Inflation is rearing its head again and that could be a big problem for the Fed.

Markets are scrambling to adjust their expectations for interest rates this year after the January

consumer price index came in hotter than expected. The January headline

CPI rose 0.3% on the month, more than the 0.2% economists expected. The annual rate

of retail inflation fell to 3.1%, disappointing traders who were looking for a first print below 3% since April 2021.

The more closely watched core rate, which excludes food and energy, was 0.4%, also a little more than the forecast.

The annual rate stayed at 3.9%, with a consensus for a drop to 3.7%.

Rent was the big driver, with shelter up 0.6% for January, higher than the intermediate average

at 0.5%. Medical care was also strong, while used cars and apparel saw declines. Real average

hourly earnings were soft. Wells Fargo

economists said, while core goods prices remained in deflationary territory,

core services inflation came in hot at 0.7 percent%, the largest gain in 16 months.

This warning CPI data are a reminder

that the road back to 2% inflation likely

will have some potholes, they added.

The good news is that core goods inflation

is already roughly back in line with its pre-pandemic pace.

With supply chain pressures no longer easing, we see more limited scope for goods disinflation without a more marked cooling in demand.

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