According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.1 % – unchanged from last month. The year-over-year core inflation (excludes energy and food) rate was also unchanged at 1.8 % and is below the target set by the Federal Reserve.

Analyst Opinion of the Consumer Price Index

Energy price changes remained the driver for inflation. Core inflation remain below 2.0 % year-over-year.

The market expected (from Bloomberg / Econoday):

  Consensus Range Consensus Actual CPI-U – month-over-month (MoM) 0.3 % to 0.4 % +0.3 % +0.5 % CPI-U year-over-year (YoY) 1.9 % to 2.3 % +2.0 % +2.1 % CPI less food & energy (MoM) 0.1 % to 0.3 % +0.2 % +0.3 % CPI less food & energy (YoY) 1.7 % to 2.0 % +1.7 % +1.8 %

As a generalization – inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy – and cannot be used as an economic indicator.

The major influence on the CPI was again energy prices.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.1 percent before seasonal adjustment. The seasonally adjusted increase in the all items index was broad-based, with increases in the indexes for gasoline, shelter, apparel, medical care, and food all contributing. The energy index rose 3.0 percent in January, with the increase in the gasoline index more than offsetting declines in other energy component indexes. The food index rose 0.2 percent with the indexes for food at home and food away from home both rising. The index for all items less food and energy increased 0.3 percent in January. Along with shelter, apparel, and medical care, the indexes for motor vehicle insurance, personal care, and used cars and trucks also rose in January. The indexes for airline fares and new vehicles were among those that declined over the month. The all items index rose 2.1 percent for the 12 months ending January, the same increase as for the 12 months ending December. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 5.5 percent and the food index advanced 1.7 percent.

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