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Inflation Rate Was 3.1% in January, Per New Consumer Price Index Data

 1 year ago
source link: https://www.businessinsider.com/inflation-cpi-consumer-price-index-january-housing-food-energy-prices-2024-2
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Inflation comes in hotter than expected

Feb 13, 2024, 1:40 PM UTC
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  • The consumer price index increased 3.1% year over year in January, higher than the forecast of 2.9%.
  • That's also below the 3.4% rise in December.
  • The CPI rose 0.3% month over month in January.
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Inflation as measured by the consumer price index, or CPI, came in above the forecast for January.

January’s year-over-year rise in the CPI was expected to be 2.9%, which would have been a massive slowdown from December’s 3.4%. According to Tuesday’s release from the Bureau of Labor Statistics, this year-over-year change was 3.1%, slightly higher than the forecast.

CPI increased by 0.3% month over month in January. That’s just above the forecast of 0.2% and above December’s month-over-month increase of 0.2%.

Core CPI, excluding volatile food and energy prices, rose 3.9% from January 2023 to January 2024 after a 3.9% increase from December 2022 to December 2023. The new reading came in above the forecast of 3.7%.

Core CPI surged 0.4% month-over-month in January. An increase of 0.3% for January was expected.

The shelter index rose by 6.0% year over year in January, just below the previous increase of 6.2% in December and marking another month of cooling. With this year-over-year increase, the recent news release wrote that this accounted "for over two thirds of the total 12-month increase in the all items less food and energy index." This index also rose 0.6% month over month in January after a month-over-month increase of 0.4% for both November and December.

Meanwhile, the index for energy declined by 4.6%, a bigger decline than the 2.0% decline in December. Gas prices fell 6.4% for the 12 months ending January. The energy index declined month over month by 0.9% in January compared to the 0.2% decline in December. Plus, the index for gasoline fell 3.3% in January from the preceding month.

Food also saw some month-over-month increases. The food index surged 0.4% month over month. More specifically, food away from home rose 0.5% and food at home rose 0.4% from the preceding month.

The food index climbed 2.6% for the 12 months ending January, similar to the 2.7% rise for the 12 months ending December.

Additionally, real average hourly earnings increased as noted in a different news release from BLS on Tuesday. The release noted that given the 0.6% rise in average hourly earnings in January plus the 0.3% increase seen in the CPI month over month, real average hourly earnings rose 0.3%.

"Consumer sentiment has recently moved sharply higher partly because of improving outlooks for inflation and income," Mark Hamrick, senior economic analyst for Bankrate, said in commentary before the CPI data was published. "One added benefit of the moderation of inflation is the emergence of positive real wages."

The Consumer Sentiment Index from the University of Michigan Surveys of Consumers climbed from 69.7 in December to 79.0 to kick off 2024. The Index of Consumer Expectations also massively surged — from 67.4 in December to 77.1 in January. Additionally, New York Fed Survey of Consumer Expectations data shows the one-year ahead median expected inflation rate had largely been cooling but stayed at 3.0% in January.

"The January inflation data came in hotter than expected, which serves to dampen expectations for an interest rate cut in the near term," Hamrick said in commentary after the new CPI data was released. "While it is disappointing for those eager to see an interest rate reduction, one must be mindful that economic data seldom moves along a straight line."

But there's also more data the Fed can look at before the next Federal Open Market Committee meeting happening in March, including the jobs report that will show how the job market had fared in February.

"The Fed will see another CPI release before they meet again," Elizabeth Renter, data analyst at NerdWallet, said in new commentary. "They'll also see another PCE index (their preferred inflation measure), a jobs report, a JOLTS release and a stack of other economic data releases. That doesn't mean today's inflation numbers don't matter, but rather that they're a single touchpoint in a catalog of recent-past and upcoming indicators."


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