U.S. consumer prices climbed at their fastest pace in nearly 18 months in January, surpassing economists’ expectations, while underlying inflation pressures strengthened more than anticipated.
Gains were broad-based, led by rising housing costs and reinforced by continued increases in food, gasoline, and healthcare expenses.
Shelter prices accounted "for nearly 30 percent of the monthly all items increase," the Labor Department’s inflation report noted.
The headline inflation figure shows a 0.5% increase in U.S. consumer prices for January, the largest gain since hitting the same level in August 2023, following a 0.4% uptick in December, according to the Labor Department’s February 12 Consumer Price Index (CPI) report.
The Consumer Price Index (CPI), a key inflation gauge, tracks what American consumers pay for a wide range of everyday goods and services, from coffee to cars. The widely reported consensus was for a 0.3% monthly increase.
Food prices overall rose 0.4% in January, following a 0.3% increase in December. Grocery store prices climbed 0.5%, accelerating from December’s 0.3% gain, while dining-out costs edged up 0.2%, slowing from the previous 0.3% rise.
Annually, food prices were up 2.5%, unchanged from December. Grocery prices advanced 1.9%, slightly higher than the prior 1.8% increase, while dining-out expenses rose 3.4%, easing from 3.6%.
In other sectors, gasoline prices rose 1.8% in January, slowing from a 4% increase in December. Year-over-year, gas prices declined by 0.2%, following the prior 3.4% drop.
The broader energy index, which covers gasoline, electricity, and fuel oil, increased 1.1% in January after a 2.4% gain in December. Year-over-year, energy prices were up 1%, reversing the prior 0.5% decline.
Excluding volatile food and energy components, the rate of core consumer prices rose 0.4% in January, up from the previous 0.2% increase and coming in a tenth of a percentage point above expectations.
Shelter costs climbed 0.4%, rising from December’s 0.3% gain and marking their 57th consecutive monthly increase. Year-over-year, shelter prices rose 4.4%, slowing from the prior 4.6% gain.
Other recent 12-month comparisons show gains of 4.7% in November, 4.9% in both October and September, 5.2% in August, 5.1% in July, 5.2% in June, 5.4% in May, 5.5% in April, 5.7% in both March and February, 6% in January, 6.2% in December 2023, 6.5% in November 2023, 6.7% in October 2023, 7.2% in September 2023, 7.3% in August 2023, 7.7% in July 2023, 7.8% in June 2023, 8% in May 2023, 8.1% in April 2023, and 8.2% in March 2023, the latter being the most significant annual increase since June 1982.
The shelter component of the CPI includes prices for items such as apartment rents, owners’ equivalent rent – a measure of what homeowners would pay to rent or earn from renting their property – lodging away from home like hotels and motels, and housing at schools.
In other key pricing categories:
- Clothing prices dropped 1.4% in January, reversing a 0.1% increase in December, but remained 0.4% higher than a year earlier.
- New vehicle prices were unchanged for the month after rising 0.5% in December, while year-over-year they declined 0.3%.
- Used car and truck prices climbed 2.2% in January, adding to December’s 0.8% gain, and were up 1% from the previous year.
- Airline fares rose 1.2% in January following a 3% increase in December, surging 7.1% over the past year.
In terms of the headline annual rate, inflation climbed 3% for the 12 months ending in January, the highest increase since June and a tenth of a percentage point above forecasts. This follows a 2.9% rise in the previous report.
For a broader perspective and a look further back, the inflation rate peaked at 9.1% during the 12-month period ending in June 2022. This was the fastest rate of inflation since November 1981. Additionally, until March 2023, inflation rates had remained at or above 6% for 17 consecutive months.
Meanwhile, core inflation rose 3.3% over the year through January, coming in two-tenths above expectations and following the previous 3.2% increase. This core, "all items less food and energy" index, is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.
"The moderation we saw in consumer inflation last summer is no longer visible now," Reuters quoted Scott Anderson, chief U.S. economist at BMO Capital Markets. "The problem for the Fed is this isn’t just a one-month event, but looks like a real multi-month firming of inflation pressures."
In September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
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 February 12, 2025. 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 2024 to January 2025 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
| July 2024 | Aug 2024 | Sept 2024 | Oct 2024 | Nov 2024 | Dec 2024 | Jan 2025 | 12 Month | |
| All items | 0.1 | 0.2 | 0.2 | 0.2 | 0.3 | 0.4 | 0.5 | 3.0 |
| Food | 0.1 | 0.2 | 0.3 | 0.2 | 0.3 | 0.3 | 0.4 | 2.5 |
| Food at home | 0.1 | 0.1 | 0.3 | 0.2 | 0.4 | 0.3 | 0.5 | 1.9 |
| Food away from home | 0.2 | 0.3 | 0.3 | 0.2 | 0.3 | 0.3 | 0.2 | 3.4 |
| Energy | -0.4 | -1.0 | -1.0 | -0.2 | 0.1 | 2.4 | 1.1 | 1.0 |
| Energy commodities | -0.8 | -1.3 | -2.3 | -1.1 | 0.2 | 3.9 | 1.9 | -0.5 |
| Gasoline (all types) | -0.9 | -1.2 | -2.3 | -1.0 | 0.3 | 4.0 | 1.8 | -0.2 |
| Fuel oil | 0.0 | -2.8 | -3.8 | -2.3 | -1.4 | 2.1 | 6.2 | -5.3 |
| Energy services | 0.0 | -0.7 | 0.6 | 0.7 | -0.1 | 0.8 | 0.3 | 2.5 |
| Electricity | 0.2 | -0.4 | 0.5 | 0.8 | -0.2 | 0.2 | 0.0 | 1.9 |
| Utility (piped) gas service | -0.5 | -1.6 | 0.7 | 0.5 | 0.5 | 2.8 | 1.8 | 4.9 |
| All items less food, energy | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.2 | 0.4 | 3.3 |
| Commodities less food, energy | -0.2 | -0.1 | 0.2 | 0.0 | 0.2 | 0.0 | 0.3 | -0.1 |
| New vehicles | -0.1 | 0.0 | 0.1 | 0.0 | 0.5 | 0.4 | 0.0 | -0.3 |
| Used cars and trucks | -1.4 | -0.2 | 0.5 | 1.2 | 1.3 | 0.8 | 2.2 | 1.0 |
| Apparel | -0.3 | 0.1 | 1.0 | -0.9 | 0.1 | 0.1 | -1.4 | 0.4 |
| Medical care | 0.2 | -0.2 | -0.7 | -0.2 | -0.1 | 0.0 | 1.2 | 2.3 |
| Services less energy | 0.3 | 0.4 | 0.4 | 0.3 | 0.3 | 0.3 | 0.5 | 4.3 |
| Shelter | 0.4 | 0.5 | 0.3 | 0.4 | 0.3 | 0.3 | 0.4 | 4.4 |
| Transportation | 0.4 | 0.8 | 1.2 | 0.4 | 0.1 | 0.5 | 1.8 | 8.0 |
| Medical care | -0.1 | -0.1 | 0.6 | 0.3 | 0.3 | 0.2 | 0.0 | 2.7 |
The BLS releases inflation data around the middle of the month, covering consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for February and the latest annual period will be made public on March 12, 2025.
The CPI data is also used to calculate inflation rates and power this site’s U.S. Inflation Calculator, which displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.
