The cost of living in the U.S. rose less than expected in January, as Americans paid less for new cars, clothes, hotels, homes and other shelter-related costs, the government reported Friday.
However, the price of energy continues to be a burden with increases during the month and year that drove inflation higher over the past 12 months, according to the Labor Department.
The Consumer Price Index (CPI), which is the government’s most closely watched barometer for measuring inflation at the consumer level, rose 0.2% in January for the fifth consecutive month. The figure is lower than the 0.3% increase most analysts were forecasting.
"Despite the extraordinary fiscal and monetary stimulus injected into the economy, many prices are still stagnant or declining," Dan Greenhaus, chief economic strategist for Miller Tabak, wrote in a research note on Friday that was quoted on NYTimes.com. Adding, "The pricing situation still remains fragile."
Leading the increase were higher fuel costs, and a modest up tick in food prices. Excluding volatile food and energy prices, the core CPI fell 0.1% in January — the biggest decline since December 1982.
"This is even more surprising of an outcome when one considers that most other advanced nations have shown some recent inflation strength," said TD Securities economics strategist Ian Pollick in a commentary cited on CBC News. "Having said that, while we don’t expect core prices to remain negative, our view for the remainder of the year is for core prices to trend lower, underscoring the large degree of slack in the U.S. economy," Pollick added.
The same December reading was up by 0.1%.
Annual inflation came in at 2.6%, led by energy prices that jumped 19.1% over the past 12 months. The inflation figure is right within the Federal Reserve’s comfort range of between 1%-2%.
"The broader picture remains one of subdued inflation, and this gives the Fed ample reason to stay on the sidelines until at least very late in the year," Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, was quoted on Bloomberg.
Inflation hit 2.7% in December during the prior 12 months.
January Consumer Price Details
Rising prices include:
- Used car and truck prices rose 1.5% and have increased 12.9% over the past
- Energy prices rose 2.8% in January, its ninth consecutive increase. Over the past 12 months, the
energy has risen 19.1%.
- Gasoline prices jumped 4.4%, and have soared 51.3% in the past 12 months
- Fuel oil prices increased 6.1%
- Natural gas costs were up 3.5%
- Food prices moved up 0.2%, although they are down 0.4% over the past 12 months
- Medical care expenses climbed 0.5% — the largest increase in 2 years
- Dairy and related products prices jumped 2.1%
- Prices for fruits and vegetables increased 1.3%
Declining prices include:
- Airfares declined 2.5% after increasing for six straights months
- Lodging away from home prices fell 2.1% — hotel and motel rates dropped 2.1%
- Clothing prices fell 0.1%
- New vehicles prices declined 0.5%
- The index for electricity declined 1.1%
To compare how the buying power of the US dollar has changed over time, check out the updated Inflation Calculator.