Inflation Comes in Hotter than Expected

The consumer price index for all items rose 0.6% in January, driving up annual inflation by 7.5% which marked the biggest gain since February 1982

The consumer price index (CPI), which measures the costs of dozens of everyday consumer goods, rose 7.5% compared to a year ago vs. an estimate of 7.2%, the Labor Department reported.

Consumer prices in January surged more than expected over the past 12 months, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year, reports CNBC.

The closely watched inflation gauge was the highest reading since February 1982. On a percentage basis:

  • Fuel oil rose the most in January, surging 9.5% as part of a 46.5% year-over-year increase.
  • Vehicle costs, which have been one of the biggest inflation contributors since it began surging higher in the spring of 2021, were flat for new models and up 1.5% for used cars and trucks in January.
  • Shelter costs, which make up about one-third of the total CPI number, increased 0.3% on the month and is up 4.4% over the past year and could keep inflation readings elevated in the future.
  • Food costs jumped 0.9% for the month and are up 7% over the past year.

The hotter-than-expected inflation reading may prompt the Federal Reserve to accelerate interest rate hikes — a full percentage point increase by the start of July, according to CNBC.


References:

  1. https://www.cnbc.com/2022/02/10/january-2022-cpi-inflation-rises-7point5percent-over-the-past-year-even-more-than-expected.html
Advertisements