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Economy in Brief

U.S. Consumer Price Increase Is Propelled to 40-Year High
by Tom Moeller  February 10, 2022

• Annual gain remains strongest since 1982.

• Both core goods and services prices strengthen further.

• Energy prices jump and food price increase accelerates.

Ample liquidity, firm economic growth and supply constraints continue to fuel pricing power. The Consumer Price Index rose 0.6% during January and the 7.5% y/y rise was the largest since February 1982. A 0.4% January increase was expected in the Action Economics Forecast Survey. December's gain was revised to 0.6% from 0.5%. Core price inflation also strengthened. Last month's 0.6% rise repeated the unrevised December increase. The 6.0% y/y gain also was the strongest in four decades. The m/m increase compared to an expected 0.5% rise. Pricing power was prevalent throughout the economy in 2021, but it was notable in core goods where the 11.7% increase was almost triple the service price gain.

Goods prices excluding food & energy strengthened 1.0% in January after rising 1.2% in December. Used car & truck prices rose 1.5% (40.5% y/y) after strong gains in the prior three months. The cost of new vehicles, however, held steady (12.2% y/y). Appliance prices increased 1.5% (8.5% y/y) while household furnishings prices surged 1.6% (9.3% y/y). Apparel prices strengthened 1.1% (5.3% y/y) for a second straight month. Also strong were recreation product prices which rose 1.0% (4.1% y/y). Medical care product prices improved 0.9% (1.4% y/y) and education & communication product costs rose 0.3% last month (0.8% y/y).

Energy prices also were strong in January, posting a 0.9% increase (27.0% y/y), the same as the prior month. The cost of electricity strengthened 4.2% (10.7% y/y) and fuel oil costs surged 3.8% (36.4% y/y). Gasoline prices slipped 0.8% (+40.0% y/y) while natural gas prices fell 0.5% (+23.9% y/y).

Food price inflation climbed further last month with prices rising 0.9% (7.0% y/y) after December's 0.5% increase. Egg prices rose 2.0% (13.1% y/y) while cereal & bakery product prices gained 1.8% (6.8% y/y). Dairy product costs rose 1.1% (3.1% y/y) and fruit & vegetable prices rose 0.9% (5.7% y/y) in January. Meat, poultry & fish prices gained 0.2% (12.2% y/y) but nonalcoholic beverage prices eased slightly (+5.0% y/y).

Services prices rose 0.4% in January after a 0.3% December increase. Transportation services prices strengthened 1.0% in January (5.6% y/y) as the cost of public transportation costs surged 1.6% (4.0% y/y). Recreation services prices increased 0.8% in January (5.0% y/y). Prices of medical care services rose 0.6% (2.7% y/y). Education & communication services costs edged 0.1% higher last month (1.7% y/y). Shelter prices increased 0.3% (4.4% y/y). Owners' equivalent rent of primary residences improved 0.4% (4.1% y/y) for the fifth straight month. Rents of primary residences gained 0.5% (3.8% y/y) while the cost of lodging away from home declined 3.9% (+20.5% y/y).

Today's figures reflect benchmark revisions to seasonal factors for the last five years as well as updated component weightings. The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) Jan Dec Nov Jan Y/Y 2021  2020 2019
Total 0.6 0.6 0.7 7.5 4.7 1.2 1.8
Total less Food & Energy 0.6 0.6 0.5 6.0 3.6 1.7 2.2
  Goods less Food & Energy 1.0 1.2 0.9 11.7 6.4 0.1 0.2
  Services less Energy 0.4 0.3 0.4 4.1 2.6 2.2 2.8
 Food 0.9 0.5 0.8 7.0 3.9 3.4 1.9
 Energy 0.9 0.9 2.4 27.0 21.0 -8.5 -2.1
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