January Inflation - Beating Expectations

Overall, the January inflation levels were improved from December and beat expectations, marking its lowest level since May of last year. Core inflation, which excludes the volatile food and energy prices met analyst expectations – a potential signal of cooling price growth.  In January prices rose 2.4% compared to a year ago, beating expectations of a 2.5% increase and falling 0.3% below the December figure. Month-over-month, prices rose at a rate of 0.2%, falling below December’s 0.3% increase.  Core inflation rose 2.5% year-over-year, a rate not seen since March 2021. On a monthly basis, core CPI increased by 0.3%, slightly above December’s 0.2% rise.  As a reminder, in December, the FOMC lowered interest rates for a third straight meeting to guard against labor market uncertainty but decided to hold rates steady in the month of January as anticipated. If inflation remains manageable, we would expect policymakers to favor accommodation in support of the labor market in the year ahead.

• Consumer prices (CPI) increased 2.4% year-over-year.  In January, the consumer price index (CPI) increased 2.4%, beating expectations and falling 0.3% below December’s reading.  The cost of medical care services (+3.9%) shelter (+3%), and food (+2.9%)  were key contributors to the overall increase, offsetting declines in energy (-0.1%) and used vehicles (-2%).  Core CPI (excludes food and energy) increased 2.5% year-over-year, 0.1% lower than December and in line with expectations.
• Consumer prices (CPI) rose 0.2% month-over-month.  In January, consumer prices rose 0.2% month-over-month beating expectations by 0.1%.  Core CPI (excludes food and energy) increased 0.3% month-over-month, meeting expectations.