The Bureau of Labor Statistics reported that consumer prices increased 0.1 percent in January, edging marginally higher for the third straight month. The largest increase in each of the last two months has been with energy goods (up 1.6 percent and 0.6 percent, respectively), but with a difference this time around. In December, higher energy prices stemmed largely from increases in gasoline, but the gains in January were primarily from an acceleration in household utility bills. A similar finding was noted in yesterday’s producer price index, with colder weather pushing up the cost of electricity and piped-in natural gas.
In contrast, food prices rose just 0.1 percent in January, both for food purchased for the home and at restaurants. Increased prices for baked goods, cereals, dairy products, meats and poultry were offset by declining costs for fruits and vegetables.
Outside of food and energy, core inflation was also up 0.1 percent. There were increases in the cost of medical care, housing, and transportation, but there were somewhat offset by declining prices for apparel and new and used vehicles. On a year-over-year basis, core inflation rose 1.6 percent between January 2013 and January 2014. While core prices have accelerated from October’s 0.9 percent annual pace, overall pricing growth remains mostly acceptable. For instance, it remains below the Federal Reserve’s stated goal of 2 percent, which it has done every month for 12 straight months.
Chad Moutray is the chief economist, National Association of Manufacturers.