U.S. Annual Inflation Pops To 2.5%; Consumer Prices Ease In January

Underlying inflation in the United States grew in January with increases in shelter and clothing costs but inflation remained tamed overall for the month as energy prices declined, a government report showed Thursday, Feb. 13. Still, the annual pace ran the quickest in more than a year.

For a second straight reporting period, costs from a year ago increased for both energy and food. Before then, year-over-year energy prices posted a streak of seven consecutive declines while food prices climbed.

U.S. consumer prices increased 0.1% in January after rising 0.2% in December, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from cereal to cars.

"There is not no inflation out there and with unemployment claims remaining at low full-employment levels, inflation pressures will continue to build," Reuters quoted Chris Rupkey, chief economist at MUFG in New York.

In key pricing categories:

  • Prices at the pump fell 1.6% for the month as compared to the 3.1% advance in December. Gasoline prices surged 12.8% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, fell 0.7% in January after rising 1.6% previously. Energy prices year-over-year moved up 6.2%.

  • Overall prices for food rose 0.2% for a second month in a row. Food prices increased 1.8% year-on-year.

Excluding the more volatile food and energy components, so-called core consumer prices rose 0.2% in January following their 0.1% increase in December.

Shelter or housing costs rose 0.4% from 0.2%, while the year-over-year pace registered at 3.3%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline annual figure, U.S. inflation advanced 2.5% in January from 2.3% in the 12 months ending December. The inflation rate was the highest since the period ending October 2018.

Core inflation rose 2.3% over the last 12 months, matching the annual core increases reported in each of the three prior months. This core, "all items less food and energy" index 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 its key interest rate.

"The Fed is on hold, and they are much more likely to cut rates in response to slowing growth than to raise rates in response to rising inflation," MarketWatch quoted Eric Winograd, senior economist at AllianceBernstein.

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) on Feb. 13, 2020. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

July 2019 to January 2020 Consumer Prices – Gains & Losses in Percent

  July 2019 Aug 2019 Sept 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 12 Month
All items 0.3 0.1 0.1 0.2 0.2 0.2 0.1 2.5
  Food .0 .0 0.2 0.2 0.1 0.2 0.2 1.8
    Food at home -0.2 -0.1 0.1 0.2 0.1 .0 0.1 0.7
    Food away from home 0.2 0.2 0.3 0.2 0.2 0.3 0.4 3.1
  Energy 0.9 -1.4 -0.8 1.7 0.8 1.6 -0.7 6.2
    Energy commodities 1.4 -2.3 -1.5 2.6 1.2 3.0 -1.6 12.1
      Gasoline (all types) 1.5 -2.4 -1.5 2.7 1.2 3.1 -1.6 12.8
      Fuel oil 0.3 -0.9 -0.6 1.1 1.0 1.1 -0.4 6.5
    Energy services 0.2 -0.2 0.1 0.7 0.2 -0.2 0.6 -0.4
      Electricity 0.5 -0.2 0.2 0.6 0.2 -0.2 0.4 0.5
      Utility (piped) gas service -0.9 .0 -0.2 1.2 0.5 -0.5 1.0 -3.2
  All items less food, energy 0.3 0.2 0.2 0.1 0.2 0.1 0.2 2.3
    Commodities less food, energy 0.2 0.1 .0 -0.4 -0.1 .0 .0 -0.3
      New vehicles 0.1 -0.1 -0.1 -0.1 -0.1 0.1 .0 0.1
      Used cars and trucks 0.4 0.5 0.6 -1.2 -0.7 -0.4 -1.2 -2.0
      Apparel 0.1 0.1 -0.3 -1.7 0.6 0.1 0.7 -1.3
      Medical care 0.2 0.2 -0.1 1.0 .0 1.0 -0.6 1.7
    Services less energy 0.3 0.3 0.2 0.3 0.3 0.2 0.3 3.1
      Shelter 0.3 0.2 0.3 0.1 0.3 0.2 0.4 3.3
      Transportation 0.1 0.3 0.2 0.1 .0 -0.1 0.3 0.7
      Medical care 0.5 0.7 0.4 0.8 0.4 0.3 0.3 5.1

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for February and the latest annual period become public on March 11, 2020.

CPI data is used in calculating inflation rates and in this site’s U.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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