Energy Prices Continue to Fall


The CPI was unchanged in January. The decrease in energy prices in January offset increases in the “core” CPI and the food index.

The Consumer Price Index (CPI), reported by the Bureau of Labor Statistics (BLS), was unchanged in January on a seasonally adjusted basis. The CPI remained unchanged for the third consecutive month. Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.6% in January, slower than a 1.9% increase in December. It was the smallest gain since June 2017 on a year-over-year basis.

Excluding the volatile food and energy components, the “core” CPI increased by 0.2% in January, the same increase as in the past four months. Over the past twelve months, the “core” CPI increased by 2.2% for the third straight month.

The price index for a broad set of energy sources dropped by 3.1%, after two declines in November (-2.8%) and in December (-2.6%). Meanwhile, the food index rose by 0.2% in January and the indexes for shelter increased by 0.3%.

The figure below shows monthly changes in the CPI, the “core” CPI, energy prices and the food index in the past three months. The decreases in energy prices accounted for the flat changes in the CPI in the past three months, as the “core” CPI and the food index rose.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index rose by 0.1% in January, after unchanged in December. Over the past twelve months, the monthly growth rate of the Real Rent Index was 0.1% on average, slower than the average of 0.2% in 2017.

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