United States: Inflation in January hits highest level since October 2014
February 19, 2016
Seasonally-adjusted consumer prices remained unchanged in January compared to the previous month. The result contrasted both the 0.1% decrease observed in December and the 0.1% fall the markets had expected. In January, food prices were unchanged, while energy prices declined notably.
Owing to a favorable base effect, inflation climbed from 0.7% in December to 1.4% in January and marked the highest level since October 2014. Annual average inflation edged up from 0.1% in December to 0.2% in January.
Core consumer prices, which exclude prices for foodstuff and energy, rose 0.3% in January over the previous month and followed the 0.2% increase registered in December. The result also beat market expectations of a 0.2% increase. Core inflation rose from 2.1% in December to 2.2% in January, the highest print in three-and-a-half years. Annual average core inflation inched up from 1.8% in December to 1.9% in January.
In the minutes from the January FOMC meeting, monetary authorities stated that a return of inflation to the target, “would take somewhat longer than previously anticipated” in the wake of renewed downward pressures coming from further declines in energy prices and continued strengthening of the dollar.
Author: Ricardo Aceves, Senior Economist