Consumer prices increased in January as energy prices increased. However, “core” consumer prices were unchanged, indicating that inflationary pressures remained muted as the economy continues to recover amid the COVID-19 pandemic.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.3% in January on a seasonally adjusted basis, faster than a 0.2% increase in December. Excluding the volatile food and energy components, “core” CPI was unchanged in January. While the indexes for apparel (2.2%), medical care (0.4%), shelter (0.1%), and motor vehicle insurance (1.6%) all rose over the month, the indexes for used cars and trucks (-0.9%), recreation (-0.6%), airline fares (-3.2%), and new vehicles (-0.5%) all declined.
Energy prices continued to rise in January. The price index for a broad set of energy sources rose by 3.5%, after an increase of 2.6% in December. It marks the biggest monthly increase since July. The jump in energy prices accounted for most of the increase in overall prices. The food index rose by 0.1% in January, after a 0.3% increase in December. The index for food at home fell by 0.1% in January, while the index for food away from home rose by 0.3%.
During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.4% in January, the same increase as in December. Meanwhile, the “core” CPI increased by 1.4% over the past twelve months, slower than a 1.6% increase in December. The food index rose by 3.8% and the energy index declined by 3.6% over the past twelve months.