Tangible increases in many basics lead a stronger-than-expected 0.5 percent jump in consumer prices for January. The core, which excludes food and energy, confirms the strength, up 0.3 percent which hits Econoday's high estimate. Despite the strength, neither year-on-year rate were able to advance, at 2.1 percent overall and 1.8 percent for the core.
Transportation leads the month, up a very sharp 1.8 percent with parking, vehicle leasing, body work, insurance and vehicle fees all up in what looks like beginning-of-the-year price increases. Prices of new vehicles actually fell 0.1 percent though used cars were up 0.4 percent.
Medical care, which had been flat, rose 0.4 percent despite a 0.2 percent dip in the closely watched prescription drug component. Hospital services jumped 1.3 percent with health insurance up 0.6 percent.
Apparel, which had been sinking sharply, popped back in January with a 1.7 percent jump led by a 3.4 percent surge in women's apparel.
Gasoline prices were up in the 5.7 percent in January which fed a 3.0 percent rise for energy. Food prices remain subdued, up 0.2 percent. Housing, which is the largest component in this report, rose only 0.2 percent though the owners' equivalent rent sub-component rose 0.3 percent for a second straight month.
Consumer prices are showing what could, in retrospect, be seen as emerging life, early acceleration tied perhaps to the emergence of underlying wage pressures. Today's report is certain to lend itself to anti-inflationary prudence especially among the hawks on the FOMC.
The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation for the consumer. Annual inflation is also closely watched.
The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group, representing about 87 percent of the population. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.
The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.
The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.
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