US Inflation Flat in January, Annual Inflation Rate Jumps to 1.4%

The cost of living in the United States was flat in January as cheaper food and gasoline offset bigger housing and medical care bills, according to a government report released on Friday, Feb. 19.

Over the past 12 months, however, US inflation doubled the rate in December and ran at its fastest pace since late 2014.

Consumer prices were unchanged in January after dipping 0.1% in December, the US Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what American consumers pay for everything from cars to clothing to eggs.

In January, prices at the pump dropped by 4.8% for a second month in a row. They are 7.3% lower than a year earlier. The declining trend looks to continue through this month with a gallon of regular gasoline averaging $1.721 on Feb. 19, according to AAA.

The broader pricing index for energy, which combines items like gasoline, electricity and fuel oil, fell 2.8% in January, matching their December decline. Energy prices over the past year stepped back 6.5%.

Prices at the grocery store were flat overall last month after dipping 0.2% in December. The cost of food did rise 0.8% over the past 12 months.

Excluding volatile food and energy, so-called core consumer prices advanced 0.3% in January — their biggest gain since August 2011, after rising 0.2% previously.

"The increase was broad-based, with most of the major components rising, but increases in the indexes for shelter and medical care were the largest contributors," the Labor Department’s report said.

The cost of owning a home or renting an apartment rose 0.3% in January after picking up 0.2% in December, and is 3.2% higher than a year earlier. Medical care prices jumped 0.5% compared to their previous monthly gain of 0.1%. They are 3.3% higher over the past 12 months.

US inflation surged 1.4% in the past year — the fastest annual rate since October 2014, and follows the 0.7% increase in 2015.

In rounding out the Labor Department’s report, core US inflation advanced 2.2% on an annual basis, the most since June 2012, and after rising 2.1% in 2015. The core reading is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set the key interest rate.

"It is a policymaker’s dream come true, they wanted more inflation and they got it," Reuters quoted Chris Rupkey, chief economist at MUFG Union Bank in New York.

Inflation data through January 2016 is presented below. The table provides monthly and annual percentage changes in the prices of major consumer goods and services. The US Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) monitors these prices around the country, analyzes them, and then summarizes their results in monthly reports.

July 2014 – January 2016 Consumer Prices – Gains & Losses in Percent

  July 2015 Aug 2015 Sept 2015 Oct 2015 Nov 2015 Dec 2015 Jan 2016 12 Month
All items 0.1 .0 -0.1 0.2 0.1 -0.1 .0 1.4
  Food 0.1 0.2 0.3 0.1 -0.1 -0.2 .0 0.8
    Food at home 0.1 0.2 0.2 .0 -0.3 -0.4 -0.2 -0.5
    Food away from home .0 0.2 0.5 0.2 0.2 0.1 0.3 2.7
  Energy .0 -1.7 -3.7 0.4 0.3 -2.4 -2.8 -6.5
    Energy commodities 0.5 -3.4 -6.8 0.9 0.7 -4.8 -4.8 -8.5
      Gasoline (all types) 0.7 -3.4 -7.1 0.9 0.8 -4.8 -4.8 -7.3
      Fuel oil -3.4 -8.1 -2.4 -1.1 -1.3 -7.8 -6.5 -28.7
    Energy services -0.6 0.3 -0.3 -0.1 -0.2 -0.7 -0.7 -4.7
      Electricity -0.3 0.2 -0.1 .01 0.2 -0.4 -0.7 -2.4
      Utility (piped) gas service -1.7 0.6 -0.9 -0.9 -1.7 -1.9 -0.6 -12.7
  All items less food, energy 0.2 0.1 0.2 0.2 0.2 0.2 0.3 2.2
    Commodities less food, energy -0.1 -0.1 .0 -0.1 -0.1 -0.1 0.2 -0.1
      New vehicles -0.1 .0 .0 -0.1 .0 .0 0.3 0.6
      Used cars and trucks -0.4 -0.3 -0.2 -0.1 0.1 0.2 0.1 0.9
      Apparel 0.2 0.2 -0.4 -0.5 -0.1 -0.2 0.6 -0.5
      Medical care 0.1 0.2 -0.1 0.2 0.2 0.1 0.4 2.1
    Services less energy 0.2 0.2 0.3 0.3 0.3 0.2 0.3 3.0
      Shelter 0.3 0.2 0.3 0.3 0.2 0.2 0.3 3.2
      Transportation -0.1 .0 0.1 0.1 0.5 0.3 0.4 2.7
      Medical care 0.2 .0 0.2 0.7 0.3 0.1 0.5 3.3

 

US inflation data from the BLS is usually published around mid-month, and it presents the change in consumer prices through to the previous month. The Consumer Price Index for February and through to the latest annual period becomes public on March 16, 2016.

CPI figures are used in calculating inflation rates. It is the backbone for this site’s inflation calculator. The US Inflation Calculator provides accumulated inflation and shows the change in buying power of the US dollar over time.

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