United States Inflation January 2020

United States

United States: Inflation edges higher at outset of the year

February 13, 2020

Consumer prices increased 0.1% over the prior month in January, softer than the 0.2% rise in December and missing market expectations of another 0.2% increase. The print was largely weighed on by falling energy prices amid the global demand shock caused by the coronavirus outbreak and declining prices of used cars and trucks. On the other hand, shelter prices edged higher in the month and apparel costs jumped. Core consumer prices—which exclude volatile items such as food and energy—ticked up to 0.2% in January from 0.1% in December.

Inflation climbed to 2.5% in January from 2.3% in December, marking an over one-year high and matching market expectations. Meanwhile, core inflation was stable at 2.3%. The core personal consumption expenditures index—a gauge of household spending closely followed by the Fed—rose to 1.6% in December from 1.5% in November, the latest month for which data is available, continuing to track below the Fed’s 2.0% target.

Commenting on the implications of January’s figures, Leslie Preston, senior economist at TD Economics stated:

“There are some interesting trends beneath the surface on inflation, but from a high level January's data indicated that overall inflation pressures remain well contained. The uptick in core inflation pressures is more reassuring that inflation pressures aren't cooling further, than a warning of an imminent break out in price pressures. This should give the Fed reassurance as they wait and assess the impact of past rate cuts and the risks to global economic growth from the novel coronavirus outbreak in China.”

FocusEconomics participants expect inflation to average 2.1% in 2020, which is unchanged from last month’s forecast. For 2021, the panel expects inflation to average 2.0%.

Author:, Economist

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United States Inflation Chart

United States Inflation January 20 20 0

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Bureau of Labor Statistics.

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