US Inflation in January Falls, Annual Inflation Rate at -0.1%

Inflation fell in January for a third straight month as American consumers continued to spend less on gas, food prices flattened and as costs retreated for new vehicles, used cars and trucks, household furnishings and operations, airline fares, alcohol and tobacco.

And on an annual basis, according to the government, US inflation turned negative for the first time since 2009.

Consumer price fell 0.7% in January from December, the biggest one-month decline since December 2008, the US Labor Department reported Thursday in its monthly report on the Consumer Price Index. The CPI measures what American pays for everything from cars, to cloths, to airline tickets, to fruits and vegetables. Consumer prices slipped a revised 0.3% in December.

Declines were again led by energy as prices at the pump tumbled 18.7% — the sharpest of the seven straight monthly declines. Gasoline prices have plunged 35.4% over the past 12 months.

US consumers finally got a bit of a break at grocery stores. Food prices showed no increase in January for the first time in a month since December 2013. They have advanced 3.2% from a year ago.

A slower pace of inflation means consumers can buy more with their money, but a sustained decline over an extended period, defined as deflation, can wreak havoc on an economy. Falling energy prices are beginning to filter down into other areas.

"The current bout of deflation/disinflation is nothing to fear," Dan Greenhaus, chief strategist at BTIG wrote in a note to clients. "Lower oil prices might weight on headline inflation measures… but lower oil/gasoline prices boost disposable incomes and by extension, spur consumption."

Stripping out food and energy, so-called core consumer prices rose 0.2% in January after coming in flat for December. The cost of shelter led gains, up 0.3%, and it has jumped 2.9% over the past 12 months. Clothing went up 0.3% last month, though prices are 1.4% lower than a year earlier.

Also, Americans paid more for health-care services in January, up 0.1%, but less for commodities such as prescription drugs. (Core increasing and decreasing goods and services are listed in the "All items less food and energy" section of the table found further below.)

US inflation declined 0.1% in the 12 months through January, the first decline in the annual rate of inflation since October 2009 and a marked contrast from December’s 0.8% increase.

Core US inflation advanced 1.6% over the last 12 months, the same as the year through December. The core 12-month reading is the benchmark inflation figure monitored by the Federal Open Market Committee (FOMC) as it helps in deciding where to set the key interest rate.

"We think inflation is going to move lower before it moves higher," Fed Chairwoman Janet Yellen said in testimony before the House Financial Services Committee on Wednesday. "Declining oil prices have had a very major influence."

The current level remains below the Fed’s 2% annual inflation target. In written remarks read to Congress, Yellen also stated:

"The Committee expects inflation to decline further in the near term before rising gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate, but we will continue to monitor inflation developments closely."

Inflation data below offers recent monthly and annual percentage changes in prices of consumer goods and services that were surveyed, analyzed and then summarized by the Labor Department’s Bureau of Labor Statistics.

July 2014 – January 2015 Consumer Prices – Gains & Losses in Percent

  July 2014 Aug 2014 Sept 2014 Oct 2014 Nov 2014 Dec 2014 Jan 2015 12 Month
All items 0.1 -0.1 0.1 0.1 -0.3 -0.3 -0.7 -0.1
  Food 0.3 0.3 0.3 0.2 0.2 0.2 .0 3.2
    Food at home 0.3 0.3 0.3 0.2 0.1 0.2 -0.2 3.3
    Food away from home 0.3 0.2 0.3 0.2 0.4 0.3 0.2 3.1
  Energy -0.2 -1.7 -0.7 -1.2 -4.1 -4.7 -9.7 -19.6
    Energy commodities -0.4 -2.6 -0.9 -2.1 -7.0 -9.0 -18.0 -34.7
      Gasoline (all types) -0.4 -2.7 -0.9 -2.0 -7.2 -9.2 -18.7 -35.4
      Fuel oil -0.7 -1.2 -2.1 -4.0 -3.5 -7.8 -9.9 -29.7
    Energy services 0.2 -0.3 -0.4 -0.1 -0.3 0.8 -0.1 1.9
      Electricity 0.2 0.2 -0.7 0.5 .0 0.6 0.9 2.5
      Utility (piped) gas service .0 -1.9 0.4 -1.9 -1.3 1.4 -3.4 -0.4
  All items less food, energy 0.1 0.1 0.1 0.2 0.1 0.1 0.2 1.6
    Commodities less food, energy .0 -0.1 0.1 .0 -0.3 -0.2 -0.1 -0.8
      New vehicles 0.3 0.1 .0 0.1 .0 .0 -0.1 0.5
      Used cars and trucks -0.1 .0 .0 -0.6 -0.9 -0.8 -0.1 -4.0
      Apparel 0.1 -0.4 0.1 -0.3 -0.7 -0.8 0.3 -1.4
      Medical care 0.3 .0 0.5 0.2 0.6 0.9 -0.3 3.9
    Services less energy 0.1 0.1 0.2 0.2 0.2 0.2 0.3 2.5
      Shelter 0.3 0.2 0.3 0.2 0.2 0.2 0.3 2.9
      Transportation -0.6 -0.3 0.1 0.5 0.2 .0 0.4 2.1
      Medical care 0.1 0.1 0.1 0.2 0.3 0.3 0.1 2.3

 

Bureau of Labor Statistic inflation data for the United States is published monthly. The information details consumer prices through to the previous month. Consumer Price Index data for February inflation and the annual period is scheduled for release on March 24, 2015.

The CPI is used to calculate US inflation rates and it is also the backbone for this site’s inflation calculator. The US Inflation Calculator provides accumulated inflation and the change in buying power of the US dollar between two dates.

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