It seems as though the effects of our current government policy has begun to take hold, as prices for consumer products and services have risen despite sharp declines in the stock markets and the economy as a whole. In January, the Consumer Price Index was up 0.3% for the month, after declining in each of the three previous months, including a record 1.7% decline in November.
The report was inline with expectations, but rather disappointing (that’s right; we see falling prices as a good thing!). Core CPI, which excludes energy and food prices because of their volatile nature, came in higher, by 0.2%, slightly higher than economists expectations. In the last year, all consumer prices have decreased by 0.5%. Core CPI has risen 1.7% in the same period, the slowest pace since 2004.
The reading was largely attributed to an increase in consumer energy prices. Energy prices in the US increased 1.7% in January, after declining by 8.3% in December and falling by a record 17% in November. The index for gasoline gained 6.0%, following a 19.3% decline in December.
In January, housing prices were unchanged, with large declines in hotel rates and household fuel bills offsetting modest increases in rent and homeownership costs. Housing costs, which represent 43% of the CPI, have fallen over the past six months but were up 2.2% in the past year.
Food prices rose 0.1% in January, putting the annualized rate of increase at 5.3%. Prices of food purchased to consume at home fell 0.1% last month.
Energy prices rose 1.7%, including a 6% increase in gasoline prices, while natural-gas and fuel-oil prices dropped. Energy prices are down 20.4% in the past year.
Although they rose 0.3% for January, apparel prices are down 0.9% in the past year.
Transportation prices increased 1.3% on the recent move higher in gasoline prices. Prices for new car prices rose 0.3%, while air fares fell 2.1%.
January’s medical-care prices rose 0.4%, the biggest gain in a year.
Tobacco prices rose 0.8% on the month.
Read the Full Report.