Inflation was still hot in January, but some prices are cooling off
Despite the monthly increase of 0.5%, inflation continued to slow on a year-over-year basis to 6.4%, according to the Bureau of Labor Statistics. That’s down from December’s 6.5% but higher than economists’ expectations of 6.2%.Monthly prices were largely pushed up by shelter costs, which accounted for nearly half of the increase, the BLS reported. Higher costs for food, gasoline and natural gas also contributed.
On an annual basis, food prices remain well above overall inflation rates: Food-at-home prices are up 11.3%, with egg prices up 70% year on year, according to BLS data. Taking out food and energy prices, which tend to have more volatility, the core CPI index increased 0.4% from December, matching the monthly gain seen previously, but moderated on an annual basis to 5.6%, from 5.7%.While economists were expecting the first report of the year to show inflation continuing to cool, they were also bracing for some uncertainty.
and unemployment dipped to a level not seen since May 1969. The monthly job gains could eventually be revised downward, but at nearly three times economists’ expectations, that stellar total underscored that bringing down inflation could be a long, drawn-out battle.“Our message [at the last meeting] really was this process is likely to take quite a bit of time,” he said during a question-and-answer session with David Rubenstein of the Economic Club of Washington DC.
January’s CPI also showed that the services excluding housing index — a closely watched measure by the Fed because of its connection to the labor market — increased 0.6% in January and is up 7.2% over the year.
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