Inflation is still “sticky” as the Labor Department’s Consumer Price Index (CPI) didn't fall as much as expected in January. Prices rose 0.3% last month for an annual inflation rate of 3.1%.
That’s down from December’s 3.4% inflation rate but economists were expecting the annual rate to drop below 3%. Two reasons it didn’t are rent and restaurant meals.
The cost of shelter rose 0.6% in January and is up 6% over the last 12 months. That increase accounted for two-thirds of January’s CPI increase.
While grocery prices are rising at a much slower rate the cost of food consumed away from home – mostly at restaurants – continues to rise at a faster pace. The cost of food consumed away from home increased 0.5% from December and is 5.1% higher year-over-year.
Some groceries are getting cheaper
Grocery shoppers saw higher prices for cereals, produce and bakery products last month but there were significant price declines for meat, poultry, fish, eggs and dairy products.
At restaurants, menu prices rose faster at fast food and fast casual places than at full-service restaurants.
A few things cost less last month. Consumers paid a lot less for energy in January. Natural gas prices are down more than 17% year-over-year while fuel oil prices have declined more than 14% during the same period.
Used car prices also declined, falling 3.4% in just 30 days. For the year, used vehicle prices are down 3.5%. New car prices were flat for the month and are up only 0.7% in the last 12 months.
Oliver Rust, head of Product at independent economic data provider Truflation, says the January CPI was a surprise.
“We expected a much more pronounced fall,” Rust said. “This small decline is out of line with the typical seasonal trend, which tends to see a spending slump following December’s exuberant consumption.”
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-02-13 16:01:09
