The January CPI report shows consumer prices for shelter, food and energy costs remain high. The Fed could raise rates yet again.
Today, the Bureau of Labor Statistics released its latest Consumer Price Index (CPI) report for January 2023 showing that inflation in the U.S. is now at 6.4%, down from 6.5% in December 2022. Inflation in America reached a 40-year high in June 2022 of 9.1%.
However, consumers are still feeling the pinch, as the monthly inflation rate rose 0.5% mostly related to shelter, food and energy costs.
The snail’s pace at which inflation is declining in the U.S. continues to cause concern for investors worried about further rate hikes at the Federal Reserve.
Earlier this month, the Federal Reserve again raised the federal funds rate by 25 basis points following the previous month’s CPI reporting. The likelihood of seeing another rate increase rose on today’s news.
The January CPI report noted that the categories which increased in January included the shelter, motor vehicle insurance, recreation, apparel, and household furnishings and operations indexes.
Of particular note, the food index rose 0.5% in this reporting period and the energy index rose 2.0%. The energy index has increased 8.7% for the 12 months ending in January 2023, and the food index has increased 10.1% over the last year.
While today’s report was the smallest 12-month increase since the period ending October 2021, the all items less food and energy index rose 5.6 percent over the last 12 months, its smallest 12-month increase since December 2021.
The report noted that the decreased costs of used vehicles, medical care and airline fares helped pull the overall inflation rate down.
The White House released a statement from President Joe Biden addressing today’s CPI report, saying data confirm that annual inflation has fallen for seven straight months and that there is still more work to do “as we make this transition to more steady, stable growth, and there could be setbacks along the way.”
“We are seeing this progress even as unemployment remains at its lowest level since 1969 and job growth remains resilient,” Biden is credited with saying.