United States: Inflation climbs to a five-year high in January
February 15, 2017
Consumer prices, adjusted for seasonal factors, increased 0.6% from the previous month, which was double the 0.3% rise in December and the 0.3% increase the markets had expected. The January result was the largest monthly increase since February 2013 and stemmed mainly from higher gasoline prices, as well as for clothing and footwear. In addition, food prices inched up from the previous month.
Inflation jumped from 2.1% in December to 2.5% in January, hitting the highest level since March 2012. The increase prompted annual average inflation to inch up to 1.4% in January from 1.3% in December.
Core consumer prices, which exclude food and energy prices, increased 0.3% from the previous month, which came in slightly above December’s 0.2% rise. Core inflation inched up from 2.2% in December to 2.3% in January.
Although the Federal Reserve targets an alternative measure of inflation called the personal consumption expenditures price index (PCEIP), it also follows the core inflation measure closely to judge whether inflationary pressures are increasing in the economy.
Many U.S. economic analysts believe that with January’s increase in consumer prices, the likelihood of an interest rate hike by the Fed at its next FOMC meeting in March is rising.
Author: Ricardo Aceves, Senior Economist