US Inflation Stays Elevated, Adding Pressure for More Fed Hikes
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CPI climbed 0.5% in January, the most in three months
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Annual headline and core measures came in higher than expected
US consumer prices rose briskly at the start of the year, a sign of persistent inflationary pressures that could push the Federal Reserve to raise interest rates even higher than previously expected.
The overall consumer price index climbed 0.5% in January, the most in three months and bolstered by energy and shelter costs, according to data out Tuesday from the Bureau of Labor Statistics. The measure was up 6.4% from a year earlier.
Excluding food and energy, the so-called core CPI advanced 0.4% last month and was up 5.6% from a year earlier. Economists see the gauge as a better indicator of underlying inflation than the headline measure. Both annual measures came in higher than expected and showed a much slower deceleration than in recent months. The figures remain far higher than the Fed’s 2% target, which is based on a separate Commerce Department index. The figures, when paired with January’s blowout jobs report and signs of enduring consumer resilience, underscore the durability of the economy — and price pressures — despite aggressive Fed policy. The data support officials’ recent assertions that they need to hike rates further and keep them elevated for some time, and possibly to a higher peak level than previously expected. The details of the report showed shelter was “by far” the largest contributor to the monthly advance, accounting for almost half of the rise. Used car prices — a key driver of disinflation in recent months — fell for a seventh month. Energy prices rose for the first time in three months. Shelter costs, which are the biggest services component and make up about a third of the overall CPI index, rose 0.7% last month. Owners’ equivalent rent and rent of primary residence increased by the same amount, while hotel stays also climbed. Excluding food and energy, goods prices rose by the most since August, following three straight declines. NN: Despite WallStrrets bombastic blowoffs… this report is a disaster. Inflation is far from under control. And the Fed will be raising the shit out of rates. And the stock market will be crashing.