Two ways to look at this morning’s U.S. inflation data.
First, the Consumer Price Index (CPI) came in above expectations with a 0.4% increase in January. Economists had expected a 0.3% increase, according to Briefing.com. That puts the headline inflation rate at an annual 1.6%, according to the Bureau of Labor Statistics.
The core inflation rate rose by a monthly 0.2%. That was above the 0.1% projected by economists. The annual core inflation rate is currently 1.0%
The increase in the headline CPI of 0.4% matched the 0.4% rate for December. The core rate moved up from 0.1% in December.
Put that together with yesterday’s slightly higher than expected—0.8% versus 0.7%–monthly increase in prices at the wholesale level and inflation does indeed look to be moving higher.
Second, that increase in the inflation rate brings the current very slow recovery more into line with the average economic recovery. A 0.2% monthly growth rate in the core inflation rate is the typical monthly increase during an economic expansion. The January numbers represent another sign that the economy is returning to normal patterns after the Great Recession.
It’s worth pointing out too that the 0.4% month increase—actually two monthly 0.4% increases in a row—is a result of higher energy (2.1% increase for the month) and food (0.7% increase for the month) costs. The United States clearly isn’t exempt from the big increases in energy and food costs that are driving inflation rates around the world.
Do I detect a note of pessimism in some of these comments (wsm, purewater and robert 1234)? inflation will rise, salaries and jobs will not increase as fast, so the investors and wealthy will gain as their investments go up and the working middle class will stop eating and being warm, as their buying power goes down. Hmmm! How do I invest my social security check to benefit from this? Food or stock market?
oops…lmao
@robert1234 …lamo
Jim, thanks for helping me to keep this inflation business in proper perspective.
wsm, I didn’t say we’re at normal or that this recovery is normal. I’ve carped on and on about how abnormal it is. It is true however that getting some inflation in the economy is a step on the path to norrmal. Normal includes short term interest rates above 0, for example.
All I can say is it is a good thing they took out food and energy from the figures, if they had not I would be really worried.
For any who are interested, I neither eat food, nor do I consume energy.
Maybe next they can take out cotton,,,, cause I also do not wear cloths… I happen to be sitting here totally nude..
Yea! Prices of everything are going up!! What wonderful news! Even better, wage increases won’t keep up with price increases, because they never do! This is just the best news ever, for sure the average family is doing way better if it costs more to buy stuff.
“The January numbers represent another sign that the economy is returning to normal patterns after the Great Recession.”
You can’t be serious. 1% core inflation after we are supposedly more than 1.5 years removed from the end of the recession hardly characterizes a ‘normal’ recovery.
Give me a break.
For those who are interested in reality, please take a look at the horrific dynamics in un/underemployment and housing.