Unusual Whales

CPI comes in at 3.1% vs 2.9% expected

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CPI comes in at 3.1% vs 2.9% expected .


Inflation, as measured by the consumer price index (CPI), exceeded expectations for January.

The CPI's year-over-year increase for January was projected to be 2.9%, a significant slowdown from December's 3.4% reading. However, the Bureau of Labor Statistics reported on Tuesday that the actual year-over-year change was 3.1%, slightly higher than forecasted.

The CPI rose by 0.3% month-over-month in January, slightly above the predicted 0.2% and higher than December's 0.2% increase.

Core CPI, which excludes volatile food and energy prices, rose by 3.9% from January 2023 to January 2024, compared to a 3.9% increase from December 2022 to December 2023. This new reading surpassed the forecast of 3.7%.

In January, core CPI surged by 0.4% month-over-month, exceeding the expected increase of 0.3%.

The shelter index, a key component, increased by 6% year-over-year in January, just below December's 6.2% increase, indicating a slight cooling trend. This index accounted for over two-thirds of the total 12-month increase in the all-items index excluding food and energy. The shelter index also rose by 0.6% month-over-month in January, following 0.4% increases in both November and December.

However, the energy index declined by 4.6%, a larger drop than December's 2% decline. Gas prices fell by 6.4% over the 12 months ending in January. The energy index decreased by 0.9% month-over-month in January, compared to a 0.2% decline in December. Gasoline prices fell by 3.3% in January from the previous month.

The food index increased by 0.4% month-over-month, with food away from home rising by 0.5% and food at home rising by 0.4% from the preceding month.

For the 12 months ending in January, the food index climbed by 2.6%, similar to the 2.7% rise for the 12 months ending in December.

Furthermore, real average hourly earnings increased, according to the Bureau. With average hourly earnings rising by 0.6% in January and the 0.3% increase in the CPI month-over-month, real average hourly earnings increased by 0.3%.

"Consumer sentiment has recently improved significantly, partly due to better outlooks for inflation and income," said Mark Hamrick, a senior economic analyst for Bankrate. "One additional benefit of lower inflation is the positive impact on real wages."

The consumer sentiment index from the University of Michigan's Surveys of Consumers rose to 79 in January from 69.7 in December. The index of consumer expectations also increased to 77.1 in January from 67.4 in December. Additionally, the New York Fed's Survey of Consumer Expectations shows that the one-year-ahead median expected inflation rate, which had been cooling, remained at 3% in January.

"The January inflation data was higher than expected, which reduces expectations for an interest rate cut in the near future," Hamrick said. "While this may disappoint those hoping for a rate reduction, it's important to remember that economic data rarely follows a straight path."