Inflation Persists as Consumer Prices Remained Above Expectations in January

The U.S. annual ahref=”https://www.theepochtimes.com/t-inflation”>inflation According to the Bureau of Labor Statistics (BoLS), the rate fell to 6.4% in January from 6.5% in December.BLS). This was higher than economists’ expectations of 6.2 percent.

The core inflation rate (which excludes volatile food and energy sectors) slowed to 5.6% last month, from 5.7%. This was also higher that the market estimate at 5.5 percent.

The Consumer Price Index (CPI), which is calculated month-over-month, shows a decrease in prices.CPI) rose 0.5 percent, and the core CPI increased 0.4 percent.

Nearly all the indexes rose on a monthly scale, with food costs increasing by 0.5 percent and food prices rising by 2 percent. The energy and food indexes were respectively 10.1% and 8.7 percent higher than a year ago.

Grocery store prices rose 11.3 percent over the past year. Eggs were up 70.1 percent, while lettuce was up 17.2 percent and bread rose 14.9 percent. Margarine prices rose 44.7 percent, butter rose 26.31%, butter rose 12.9 percent and baby food rose 10%.

Petroleum prices increased by 2.4% month over month and are still up 1.4% year over year. Annualized energy services prices rose at 15.6 percent. This includes a 11.9 percent rise in electricity costs and 26.7 percent increases in utility-piped gas services.

Shelter continued to grow, increasing 7.9 percent during the twelve-months ending in January. Rents rose 8 percent

Between December and January, new cars rose 0.2 percent, used vehicles fell 1.9%, apparel rose 0.8 percent, and medical commodities rose 1.11%. The 0.9 percent increase in transportation services was offset by a 0.7 percent drop in medical care services.

This was the first CPI report to be calculated by the BLS’s new methodology.

The federal agency declared in December 2022 that weights would be updated annually on the basis of one calendar year of consumption statistics from 2021, rather than two years’ worth of expenditure statistics. This is a crucial change as spending is now weighed more towards goods consumption than it is toward services.

Looking ahead to next month’s report, the Federal Reserve Bank of Cleveland’s Inflation Nowcasting Estimate The CPI is expected to fall to 6.4 percent, and core inflation to slow down to 5.6 percent.

The January inflation data have been published “perfect spoiler for Valentine’s Day,” Jan Szilagyi is the CEO and cofounder of Toggle AI. This investment research company offers financial advice.

“[M]arkets were expecting (hoping, praying) to get further confirmation that a) peak is in and b) decline is at least steady, if not accelerating. This is critical for the disinflationary narrative and any hope for fed cuts this year,” He said it in a written note. “We got neither.”

After the publication of the CPI report in premarket trading, the U.S. financial market struggled to find direction with the benchmark indexes flat.

The U.S. Dollar Index or DXY, which compares the greenback to a basket of currencies and gauges its performance, dropped by about 0.7 percent to 102.60.

Treasury yields were mixed. The benchmark 10-year yield dropped nearly 2 basis point to 3.70 percent.

Is the Disinflation Process Now Underway?

In the last six months, price growth in goods has slowed due to lower consumer demand and improved supply-chain conditions. Consumption has shifted to services as well.

“While price growth for goods such as groceries is likely to continue slowing in the near term, upside risks for goods price growth remain a concern as much of the easy lifting sits in the rearview mirror,” Morning Consult published a new report. Report.

“Early signs of demand recovery for categories such as autos and furniture could reverse the downward trend in goods inflation, threatening to slow the Fed’s progress against inflation.”

Inflation trends could also be affected by the performance of the wider economy. Warns John Lynch is the CIO of Comerica Wealth Management.

“A hard-landing scenario would be deflationary,” He said it in a written note. “If growth persists, inflation will likely firm, too.”

The U.S. GDP growth rate was 2.9% in the fourth quarter. This is a much higher pace than we expected. According to the Atlanta Fed Bank’s GDPNow model, first-quarter GDP is estimated to rise 2.2 percent.

In addition, the S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) report Found Input price inflation increased for the first time since May 20,22.

“The January survey meanwhile brought mixed messages on inflation,” Chris Williamson is chief business economist at S&P Global Market Intelligence. “While costs were boosted in part by rising wage pressures, reflecting the tight labor market, tough competition once again limited scope to pass on these higher costs to customers in the form of higher prices.”

Last week, Fed Chair Jerome Powell stated to the Economic Club of Washington, D.C., “the disinflationary process” “the process of getting inflation down” It is now.

According to the chief of the central bank, easing inflation was evident in the goods sector which accounts for about one quarter of the U.S. economic output. The Federal Reserve could have to keep increasing its rate hikes because of the continued rise in services sector inflation. It rose to 7.6 percent in January.

“The reality is we’re going to react to the data, so if we continue to get, for example, strong labor-market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in,” He stated.

The following is an extract from the CME FedWatch ToolThe Fed is expected to increase the benchmark federal funds rates by 25 basis points in March’s Federal Open Market Committee policy meeting.

Gene Inger, an ex-analyst for financial television and author of “The Inger Letter,” Noting that the U.S. central banks could “fade the pace of hikes and realize they’ve belatedly of course done almost all they can ‘really’ do.”

“The market should digest that well,” He left a note.