Tuesday's Market Minute: Breaking Down January CPI

January’s Consumer Price Index climbed 6.4% over the last twelve months, which was the smallest increase in that period since October of 2021. This also marked the seventh straight month of annual inflation cooling since peaking at 9.1% in June – the highest print in over four decades. However, on a month-over-month basis, the adjusted consumer price index rose 0.5% for the month, which was hotter than the 0.4% forecast and signaled an increase from 0.1% in December. Excluding food and energy (the most volatile components of the report) core CPI rose 0.4% monthly and 5.6% from a year ago, versus forecasts of 0.3% and 5.5% respectively.

The index for shelter was the greatest contributor to the monthly increase, accounting for nearly half of the all-items increase, while food, gasoline, and natural gas were also major contributors. Specifically, the food index increased 0.5% over the month with the food at home index rising 0.4%. Four of the six major grocery store food group indexes increased over the month, while meats, poultry, fish, and eggs rose 0.7%. Eggs – which have been in hyper-focus due to the lack of supply – rose 8.5%, which cooled from over 11% a month ago. The food at home index has risen roughly 11% over the last 12 months.

The energy index increased 2% over the month, with all major energy component indexes rising over the month. The energy index rose 8.7% over the last 12 months, with the fuel oil index rising almost 28% over the period, electricity rising 12%, and the index for natural gas increasing almost 27%.

Other categories that increased in January included motor vehicle insurance, recreation, apparel, home furnishings, and operations indexes. The indexes for used cars and trucks, medical care, and airline fares were among those that decreased over the month. Futures markets were mixed in reaction to the report.

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