The general consumer price index had its biggest rise in 3 months, driven by energy and housing costs.
Consumer costs in the United States rose sharply at the beginning of the year, a sign of persistent inflationary pressures that could push the Federal Reserve (Fed) to raise interest rates even more than expected. The general consumer price index rose 0.5% in January, the biggest increase in three months, driven by energy and housing costs, according to data released Tuesday by the Bureau of Labor Statistics. The increase was 6.4% compared to the previous year.
Excluding food and energy, the so-called core CPI advanced 0.4% last month and rose 5.6% year-on-year. Economists believe that this indicator better reflects underlying inflation than the general index.
The annual inflation rate in the United States slowed to 6.4% in January, compared with 6.5% in December. As for the core inflation indicator, which excludes volatile food and energy, it was 5.6% from the previous 5.7%.
US stock futures erased the gains and Treasury yields rose after the report. These numbers, coupled with January employment and signs of consumer resilience, underscore the durability of the economy—and price pressures—despite aggressive Federal Reserve policy.
The data supports recent assertions by Federal Reserve officials that rates need to continue to rise and stay high for some time, and possibly to a higher-than-expected peak.
The road to stable costs is likely to be long and bumpy. The disinflation of goods that has driven the fall in headline inflation in recent months seems to be running out of steam and The strength of the labor market continues to pose upside risks to wage growth and the prices of services.
Details in the report showed that accommodation was “by far” the largest contributor to the monthly advance, accounting for almost half of the rise. Used car prices — a key driver of disinflation in recent months — fell for the seventh straight month. Energy prices rose for the first time in three months.
Housing costs, which are the main component of services and account for about a third of the overall CPI index, rose 0.7% last month. The equivalent rent of the owner’s house and that of the main residence increased in the same proportion, while hotel stays also grew.
With information from Bloomberg
Source: Larepublica
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