US Inflation Jumps in January by Most in 4 Years

Inflation in the United States appears to be gaining steam as the cost of living increased in January by the most in nearly four years, the government reported Wednesday, Feb. 15. The annual rate of inflation advanced the most in almost five years.

Increases were broad-based, led by gains in energy with prices at the pump the highest since April 2016.

Consumer prices jumped 0.6% in January, their sixth straight monthly increase and the largest one since February 2013, after climbing 0.3% in December, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from cars to medical care.

"A sharp rise in the gasoline index accounted for nearly half the increase, and advances in the indexes for shelter, apparel, and new vehicles also were major contributors," the Labor Department said.

Gasoline prices soared 7.8% last month after rising 2.4% in December. They increased 20.3% from a year ago. The broader index for energy, which combines items like gas, electricity and fuel oil, rose 4% in January after moving up 1.5% previously. Energy prices advanced 10.8% over the last 12 months, its largest 12-month increase since November 2011.

Food prices rose 0.1% last month after registering flat for sixth straight months. They are 2% lower over the longer 12-month haul.

"The January US CPI report is a strong set of data which justifies the belief that reflationary forces have been building within the US economy in recent months," Bloomberg News quoted Michael Shaoul, chief executive officer at Marketfield Asset Management wrote in a note to clients.

Stripping the more volatile food and energy components, so-called core consumer prices rose 0.3% in January following 0.2% gains in both December and November.

Shelter costs moved up 0.2% after gaining 0.3% previously, and they are 3.5% higher over the past 12 months. Components of shelter include pricing items like rent, rental equivalence, lodging away from home, and housing at school. The used cars and trucks index was one of the few items to decline in January, falling 0.4%.

U.S. inflation surged 2.5% through the 12 months ending January, the biggest year-on-year increase since March 2012. In contrast, the rate of inflation grew 2.1% last year.

In rounding out the Labor Department’s report, core inflation advanced 2.3% on an annual basis after increasing 2.2% in 2016. The core annual 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.

The following table of key inflation figures is for the last seven months through January, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi). To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. The monthly and annual pricing changes are in percentages.

June 2016 to January 2017 Consumer Prices – Gains & Losses in Percent

  July 2016 Aug 2016 Sept 2016 Oct 2016 Nov 2016 Dec 2016 Jan 2017 12 Month
All items .0 0.2 0.3 0.3 0.2 0.3 0.6 2.5
  Food .0 .0 .0 .0 .0 .0 0.1 -0.2
    Food at home -0.2 -0.2 -0.2 -0.2 -0.1 -0.2 .0 -1.9
    Food away from home 0.2 0.2 0.2 0.1 0.1 0.2 0.4 2.4
  Energy -1.1 .0 2.4 2.5 1.0 1.2 4.0 10.8
    Energy commodities -3.1 -0.7 4.4 4.8 2.0 2.4 7.6 20.0
      Gasoline (all types) -3.3 -0.8 4.6 5.1 2.1 2.4 7.8 20.3
      Fuel oil -1.3 -2.5 2.4 5.9 -1.2 6.0 3.5 24.8
    Energy services 0.8 0.6 0.6 0.4 .0 .0 0.3 2.9
      Electricity 0.4 0.3 0.5 0.3 .0 .0 .0 1.0
      Utility (piped) gas service 2.5 1.5 0.8 0.9 0.2 0.1 1.5 10.1
  All items less food, energy 0.1 0.3 0.1 0.1 0.2 0.2 0.3 2.3
    Commodities less food, energy -0.1 0.1 -0.1 .0 -0.2 .0 0.4 -0.2
      New vehicles 0.2 .0 .0 0.2 .0 0.1 0.9 0.9
      Used cars and trucks -0.7 -0.5 -0.2 -0.1 0.2 0.2 -0.4 -3.7
      Apparel .0 0.2 -0.5 0.2 -0.3 -0.4 1.4 1.0
      Medical care 0.5 1.1 0.6 0.2 -0.4 0.5 0.3 4.7
    Services less energy 0.2 0.3 0.2 0.2 0.3 0.3 0.3 3.1
      Shelter 0.2 0.3 0.3 0.3 0.3 0.3 0.2 3.5
      Transportation 0.1 0.2 .0 -0.1 0.5 0.5 0.6 3.2
      Medical care 0.5 0.8 0.1 0.1 0.2 0.2 0.2 3.6

 

The BLS releases inflation data around the middle of a month based on consumer prices surveyed through to the previous month. The Consumer Price Index (CPI) for February and the latest annual period becomes public on March 15, 2017.

CPI data is used in calculating inflation rates and in this site’s inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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