According to data released by the Bureau of Labor Statistics (BLS), consumer prices increased in January slightly by 0.1% on a seasonally adjusted month-over-month basis. Over the past twelve months, prices on expenditures made by urban consumers increased 1.6% before seasonal adjustments.
The month-over-month increase in the all items index was driven by a 0.6% increase in the energy price index. The natural gas index, a component of the energy price index, experienced the largest month-over-month increase of 3.6% on a seasonally adjusted basis. The electricity index also experienced a large increase of 1.8% on a seasonally adjusted month-over-month basis. Over the past twelve months, the natural gas index increased 4.9% and electricity index increased 4.4% before seasonal adjustments.
Utilities bills (natural gas and electric) are an important part of residential expenditures. A large increase in prices during an especially cold winter can impede expenditures on other goods. Of course, consumption expenditures on utility bills vary by state and the age of the housing stock. In general, older homes are less energy efficient than new construction.
The Core CPI, which excludes more volatile food and energy prices, rose by 0.1% month-over-month. Over the past twelve months Core CPI increased by 1.6%.
The shelter index rose 0.3% month-over-month in January after increasing 0.2% month-over-month in December. Over the past twelve months, the shelter index increased 2.6% before seasonal adjustments.
Because shelter costs represent a large share of the average consumer’s expenditure’s, a 0.3% month-over-month increase is worth exploring further. Although the increase in the shelter index partly reflects increases in rental prices, the BLS measure does not isolate the change in rental prices from the changes in the overall price index. NAHB constructs a real rent price index to isolate the change in rental prices. The NAHB constructed measure indicates whether inflation in rents is faster or slower than general inflation and provides some insight into the supply and demand conditions for rental housing, after controlling for overall inflation.
The real rent index has increased for twelve consecutive months. The real rent index increased in January by 0.1% month-over-month and 1.2% over the past year.