U.S. Consumer Price Inflation Strengthens in January

The Consumer Price Index increased 0.5% in January after rising 0.4% in December, 0.3% in November and 0.2% in October. This steady acceleration left the y/y rise at 3.0%, the strongest gain since June and up from a low of 2.4% in September. A 0.3% January rise had been expected in the Action Economics Forecast Survey. The three-month increase in the headline CPI jumped to 4.5% (AR) from 3.5% in December. The CPI excluding food and energy rose 0.4% (3.3% y/y) following increases of 0.2% in December and 0.3% in each month from August through November. A 0.3% rise had been expected in the Action Economics Survey.

Energy prices strengthened 1.1% (1.0% y/y) last month after a 2.4% December rise. Monthly price increases were widespread. Gasoline prices increased 1.8% (-0.2% y/y) after a 4.0% December gain. Fuel oil prices surged 6.2% (-5.3% y/y) after rising 2.1% in December. Natural gas price jumped 1.8% (4.9% y/y) following a 2.8% gain in December and electricity prices held steady (+1.9% y/y) after a 0.2% rise.

Food prices rose 0.4% (2.5% y/y) after a 0.3% December increase as egg prices surged 15.2% (53.0% y/y) following a 0.7% gain. Meat, poultry & fish prices rose 0.5% (2.3% y/y) while dairy produce prices gained 0.3% (1.2% y/y). Offsetting these increases, cereal & bakery product costs fell 0.4% (+0.4% y/y) following a 1.0% increase and fruit & vegetable prices dropped 0.5% (+0.3% y/y) after improving 0.1% in December.

Services prices less energy increased 0.5% in January following three straight 0.3% gains. The y/y rate of increase slipped to 4.3%, down from 7.2% y/y two years earlier. Shelter prices rose 0.4% (4.4% y/y) last month after a 0.3% rise as owners equivalent rents increased 0.3% (4.6% y/y) for the third consecutive month. Lodging away prices from home rebounded 1.4% (2.2% y/y) after a 0.5% decline. Transportation service prices increased 1.8% (8.0% y/y) after a 0.5% increase reflecting a 2.0% rise (11.8% y/y) in the cost of motor vehicle insurance. Prices of medical services held steady (+2.7% y/y) after rising 0.2% in December and the cost of recreation services jumped 1.4% (3.8% y/y) after increasing 0.3% in December.

Goods prices less food and energy rose 0.3% (-0.1% y/y) in January after holding steady in December. Prices of used cars and trucks surged 2.2% (1.0% y/y) last month after rising 0.8% in December while new vehicle costs were unchanged (-0.3% y/y) following a 0.4% December increase. A 1.4% decline (+0.4% y/y) in apparel prices helped offset this rise while appliance prices fell 0.6% (-4.2% y/y). Home furnishings prices eased 0.2% (-0.9% y/y) for the second straight month. Recreation product costs rose 0.3% (-1.9% y/y) after falling 0.5% in December.

The Consumer Price figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.