The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The January level of 202.416 (1982-84=100) was 2.1 percent higher than in January 2006.
U.S. consumer prices rose more than forecast in January as Americans paid more for food, medical care and airfares, suggesting inflationary pressures persist.
From CBS Marketwatch:
U.S. consumer prices increased 0.2% in January, led by large gains in food, medical care and tobacco prices, the Labor Department reported Wednesday.
Core inflation, which ignores movements in food and energy prices, rose 0.3% in January, the biggest increase since June.
The greater-than-expected consumer price index could lessen the odds that the Federal Reserve would cut interest rates. The core CPI is up 2.7% in the past year, a notch higher than the 2.6% year-on-year rate in November and December.
Note that major news outlets are saying this increase is more than forecast.
There were big jumps in food and beverages (up .7) and medical care (up .8). Energy decreased 1.5%, but it's important to remember oil dropped mid-January and rebounded later in the month (see below).
The compound annual 3-month growth rate was 2% -- right at the upper-end of the Fed's comfort zone. The unadjusted 12-month growth rate was 2.7%.
For some reason, there has been a call for the Fed to decrease interest rates. The problem with this prediction is all of the Fed governors have stated inflation is still too high for each governor's personal preference. In other words, rates aren't coming down anytime soon. This report simply solidifies that situation.