US Inflation Advances with Higher Consumer Prices in January 2011

The cost of living rose more than expected in January as higher food and energy prices pushed up US inflation, according to government data released Thursday.

Consumer prices rose 0.4 percent in January 2011, matching an adjusted increase in December and capping seven months of straight gains. Most analysts expected a consumer price ceiling of no more than 0.3 percent for the month.

More than two-thirds of the increase came from food and energy, the US Labor Department said. Food prices marked their biggest gains in over two years. The overall food index was up 0.5 percent in January 2011 as compared to 0.1 percent in the previous month. Over the past year, gasoline prices surged 13.4 percent. They were up 3.5 percent last month and also capped a string of seven monthly gains.

Other increases in January included clothing, shelter, airline fares, transportation and recreation. New and used vehicle prices actually declined, 0.1 and 0.3, respectively.

Stripping out the more volatile food and energy items, the so-called core US inflation rate rose a more modest 0.2 percent in January after a 0.1 percent rise in December .

"With the substantial slack in the U.S. economy, businesses have only a limited ability to pass through higher input costs to consumers," Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, was quoted on Bloomberg. "While the Fed has acknowledged the recent sharp price increases in gasoline, crude oil and food, they remain focused on the weak gains in core prices."

US Inflation advanced 1.6 over the past 12 months following the previous 1.5 percent reading. The core US inflation rate picked-up 1.0 percent against the prior 0.8 percent. The reading remains below the Federal Reserves preferred range of between 1.6 and 2.0 percent.

"You’re seeing some pass-through of commodity costs in a few areas like airline fares, tires and clothing, but it’s still pretty muted," Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said and was cited on Businessweek. "For an upward spiral in CPI, we need to see wage inflation start to accelerate, and that’s not in the cards."

Consumer prices as reported by the US Labor Department follow:

January 2011 Consumer Prices – Gains (%)

Jul Aug Sept Oct Nov Dec Jan 12
Month
All items 0.3 0.3 0.1 0.2 0.1 0.5 0.4 1.6
  Food -0.1 0.2 0.3 0.1 0.2 0.1 0.5 1.8
    Food at home -0.1 .0 0.3 .0 0.3 0.1 0.7 2.1
    Food away from home .0 0.3 0.3 0.1 0.1 0.1 0.2 1.5
  Energy 2.6 2.3 0.7 2.6 0.2 4.6 2.1 7.3
    Energy commodities 4 3.8 1.8 4.4 0.8 7.5 4.0 13.4
      Gasoline (all types) 4.6 3.9 1.6 4.6 0.7 8.5 3.5 13.4
      Fuel oil -1.6 0.9 0.8 4.7 4.2 4.9 6.8 17.3
    Energy services 0.8 0.4 -0.8 0.2 -0.7 0.5 -0.6 -0.7
      Electricity 0.5 0.2 -0.3 0.4 0.9 0.3 -0.5 1.2
      Utility (piped) gas service 1.7 1.1 -2.3 -0.4 -5.7 1.4 -1.2 -6.4
  All items less food, energy 0.1 .0 .0 .0 0.1 0.1 0.2 1.0
    Comm. less food, energy 0.2 0.1 -0.2 -0.2 -0.1 .0 0.2 -0.2
      New vehicles 0.1 0.3 0.1 -0.2 -0.4 .0 -0.1 .1
      Used cars and trucks 0.8 0.7 -0.7 -0.9 -0.5 -0.1 -0.3 2.4
      Apparel 0.6 -0.1 -0.6 -0.3 0.2 0.1 1.0 .0
      Medical care -0.2 0.2 0.3 0.1 0.2 0.1 0.5 2.7
    Services less energy 0.1 .0 0.1 0.1 0.2 0.1 0.1 1.4
      Shelter 0.1 .0 .0 0.1 0.1 0.1 0.1 0.6
      Transportation .0 0.1 0.3 0.3 0.5 0.2 0.6 3.4
      Medical care .0 0.2 0.8 0.2 0.1 0.3 -0.1 3.0

 

The Labor Department’s Consumer Price Index for January 2011 is scheduled for release on March 17, 2011, at 8:30 a.m. (ET). The CPI data is used as the core engine for the US Inflation Calculator.

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