Morningstar

January CPI Report Shows Inflation Slowed More Than Expected at 2.4%

Core CPI rose at a 2.5% annual rate.

Collage with factory, plane, computer, tire, and shopping bag to represent the state of economy.

The Bureau of Labor Statistics reported that the Consumer Price Index increased 2.4% in January from year-ago levels after increasing 2.7% in December. Year-over-year core CPI (which excludes volatile food and energy costs) rose 2.5%, lagging the December rate of 2.6%.

Overall inflation rose 0.2% month over month after rising 0.3% in December. Core inflation rose 0.3%, matching the December increase.

Economists had expected CPI to rise 0.3% on a monthly basis and increase 2.5% year over year in January, according to the consensus estimates from FactSet. Core CPI was expected to come in up 0.3% on a monthly basis and up 2.5% year over year.

January CPI Inflation Report Highlights

  • CPI rose 0.2% for the month after rising 0.3% in December.
  • Core CPI rose 0.3% after rising 0.2% in December.
  • CPI increased 2.4% year over year after increasing 2.7% the prior month.
  • Core CPI rose 2.5% from year-ago levels after rising 2.6% in December.

Food prices increased 0.2% in January after increasing 0.7% in December. Grocery prices rose 0.2%, while restaurant prices increased 0.1%. Overall energy prices decreased 1.5% after rising 0.3% last month, while utility gas prices rose 1.0%, fuel oil prices decreased 5.7%, gasoline prices fell 3.2%, and electricity prices decreased 0.1%. Shelter prices rose 0.2% in January after rising 0.4% in December.

What Is the CPI?

The Consumer Price Index is a mainstream measure of inflation that tracks changes in consumer prices for a wide variety of goods and services including food, housing, healthcare, and energy.

The CPI report is widely followed by investors, but it isn’t the only way to keep track of inflation. When it comes to the Federal Reserve’s decisions on interest rates, the focus is generally on the Personal Consumption Expenditures Price Index. The Fed targets a 2% inflation rate, but that is based on the PCE inflation index, not the CPI. However, the CPI generally makes front-page news because it is released earlier than the PCE and contains much of the same information. Both reports are released on a monthly cadence.

This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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