The BLS reports the CPI Increased 0.6 Percent in January. That’s the largest increase since February of 2013. As with the PPI, much of the jump is oil related.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 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 2.5 percent before seasonal adjustment. The January increase was the largest seasonally adjusted all items increase since February 2013. A sharp rise in the gasoline index accounted for nearly half the increase, and advances in the indexes for shelter, apparel, and new vehicles also were major contributors.
The energy index increased 4.0 percent in January as the gasoline index advanced 7.8 percent and the index for natural gas also increased. The food index, which had been unchanged for 6 consecutive months, increased 0.1 percent. The food at home index was unchanged, while the index for food away from home rose 0.4 percent.
The index for all items less food and energy rose 0.3 percent in January. Most of the major component indexes increased in January, with the indexes for apparel, new vehicles, motor vehicle insurance, and airline fares all rising 0.8 percent or more. The shelter index rose 0.2 percent, a smaller increase than in recent months.
The all items index rose 2.5 percent for the 12 months ending January, the largest 12-month increase since March 2012. The index for all items less food and energy rose 2.3 percent over the last 12 months, and the energy index increased 10.8 percent, its largest 12-month increase since November 2011. In contrast, the food index declined 0.2 percent over the last 12 months.
CPI Month-Over-Month and Year-Over-Year
Crude Daily Chart
Ther above images better explains what is going on. On a daily chart, crude bottomed in August and prices have been on the rise since then.
Unlike the Fed, I do not discount food and energy. People have to eat, and people need transportation. The question is whether or not the trend is sustainable.
And given energy was flat in January, the jump seems outsized.
CPI Details
Did Gasoline prices rise 7.8% in January? Let’s download data from the US Energy Information Agency (EIA) and take a look.
Weekly Gas Prices
The above graph shows actual prices paid at the pump, not seasonally adjusted. The big jump in price actually occurred in December. Prices in January declined 4.1%.
That’s one hell of a seasonal adjustment in December and January!
Inquiring minds may also wish to investigate PPI Spikes 0.6% in January, Largest Jump in 20 Months: Start of Inflation Run? Will February Repeat?
Mike “Mish” Shedlock
UK seeing inflation spike too. If price rises occur MoM rates will likely rise here.
Germany seeing rises too, off topic but interesting – Euro giving inflation to Germany but without low rates Italy, France, Spain would be in even more brown stuff.
What a graph.
https://3.bp.blogspot.com/-72LRE3OddRg/WKSCYCZ0fjI/AAAAAAABNRk/vWp-FAIRPUQ4cgrgKC7CYU9oio98q9LWgCLcB/s1600/Europroduction.jpg
Medical services +3.6 % for the year ?? Does that include insurance costs. I think + 15 % would be a better figure. Should be heavily weighted too.
I think 2.5 % total overall annual inflation is way too low with health care costs included.
The truth is that the CPI is a meaningless bunch of crap. If the price goes up on something we buy only occasionally – say a house or a car – most of us aren’t affected. If it goes up on something we require periodically – say car repairs, haircuts or other services – we are affected but only marginally. If it goes up on something we NEED every day, week or month – say food, fuel or health insurance – this is a BIG deal for people living paycheck to paycheck. Lives could be potentially affected, often greatly, and there will be FAR less money for non-essentials in many budgets as these needs must take priority. As someone once told a Fed governor, “I can’t eat an iPhone!”
So what is the point of this exercise if it only dimly (if at all) reflects reality? As Einstein purportedly said, “Not everything that can be counted counts, and not everything that counts can be counted.” This silliness that the gubbermint is counting clearly does not count.
absolutely
Prices cannot be measured accurately
There is no such thing as a standard basket of goods
Understood, but doesn’t the Fed use this particularly low inflating standard basket to justify keeping interest rates low. Setting the items in the so called standard basket is a political act. People spending all their extra income on health insurance are deprived of the investment returns necessary to offset the inflation. Those in other situations are content with the low interest they can pay when buying their McMansions. Obama continued to keep the bankers in charge from the Bush years. It looks like they will continue to run things during Trump’s presidency judging from his cabinet. Perhaps we need an even more blunt and unconventional president next time.
The fact that there is no such thing as a “perfect basket of goods” is exactly why the GDP deflator is a better measure of inflation. Rather that taking a predetermined basket of goods, and measuring the price rise, the GDP Deflator reflects what was actually purchased.
Most people are very much affected by the prices of houses in San Francisco having gone up…… Young people, as in America’s future, very much negatively. And as usual in Dystopia, leeches in the finance, legal, government and real estate rackets, very much positively.
The fake low interest rates in this case allow those already owning a house to sell it for more money to the young who can still have manageable payments at the low rates even at the inflated price. These people need the low rates to keep things going. Good for them but bad for those needing a return for their invested capital.
The choices made by the Fed are injuring one set of people and benefiting the other ie. politics.
Inflation is terrible. Our ancestors used a gold standard to protect themselves from greedy bank printers.
I think the numbers are intentionally manipulated to keep govt debt financing costs low and to minimize cost of living allowance (cola) increases in social welfare spending i.e. social security , etc. Didn’t anyone find it odd that ss payments went up by about $30/ month for cola while their medicare premiums went up more? I know that the true cost of living is much higher for me, i.e. groceries, college tuition, health insurance, car insurance. It goes on and on. They know we won’t really make much of a fuss about it as long as everyone is feed and cared for by the nanny state.