Decline in Energy Prices in January


In January, core inflation increased, while headline inflation slipped as energy prices declined.

The Consumer Price Index (CPI), released by the Bureau of Labor Statistics (BLS), rose by 0.1% in January on a seasonally adjusted basis, following a 0.2% increase in December. Excluding the volatile food and energy components, the “core” CPI increased by 0.2% in January, after rising 0.1% in December. The index for shelter increased by 0.4% in January, the largest monthly growth rate in the past twenty months. Along with the index for shelter, the indexes for medical care, apparel, recreation, education and airline fares all increased in January. Increases in these indexes contributed to the increase in the “core” CPI.

In January, the price index for a broad set of energy sources decreased by 0.7%, after three consecutive months of increases. The gasoline index declined by 1.6% in January, while the electricity index and the index for utility gas service rose by 0.4% and 1.0%, respectively. Meanwhile, the food index increased by 0.2% in January, the same increase as in December. The indexes for food at home and food away from home increased over the month.

Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 2.5% in January, faster than a 2.3% increase in December. It was the largest gain since October 2018 on a year-over-year basis. Meanwhile, the “core” CPI increased by 2.3% over the past twelve months, the same increase as in the previous three months (October, November and December). The food index rose by 1.8%, and the energy index increased by 6.2% over the past twelve month.

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