Don’t expect the Fed to be cutting interest rates soon.
The BLS reports the CPI Rose 0.5 Percent in January.
Hotter than Expected
- CPI: Bloomberg Consensus 0.3% v Actual 0.5%
- Core CPI Excluding Food and Energy: Bloomberg Consensus 0.3% v Actual 0.4%
- CPI Year-Over-Year: Bloomberg Consensus 2.9% v Actual 3.1%
- Core CPI Year-Over-Year: Bloomberg Consensus 3.1% v Actual 3.3%
CPI Month-Over-Month Details
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent on a seasonally adjusted basis.
- The index for shelter rose 0.4 percent in January, accounting for nearly 30 percent of the monthly all items increase. Rent of primary residence rose 0.3 percent and owners’ equivalent rent was up 0.3 percent.
- The energy index rose 1.1 percent over the month and the gasoline index increased 1.8 percent.
- The food at home index increased 0.5 percent and the food away from home index rose 0.2 percent over the month.
- The index for all items less food and energy rose 0.4 percent.
- Medical care commodities jumped 1.2 percent and medical care services was unchanged.
CPI Month-Over-Month Rent and OER
Both Owners’ Equivalent Rent and Rent of Primary Residence increased 0.3 percent. Shelter rose 0.4 percent. These are nasty numbers.
Shelter is 35.48 percent of the CPI, with OER at 26.28 percent and Rent of Primary Residence at 7.50 percent.
OER plus Rent is 33.78 percent of the CPI. That means other components of shelter such a utilities and insurance jumped in January.
A quick check shows energy services (electricity and natural gas) rose 3.09 percent. Ouch. Tenants and household insurance jumped 1.1 percent. Another ouch.
CPI Month-Over-Month Medical Care
The 1.2 percent jump in Medical Care Commodities is huge. Fortunately, Medical Care Services was unchanged.
Medical Care Services is 6.75 percent of the CPI. Medical Care Commodities is 1.53 percent of the CPI.
CPI and PCE Year-Over-Year Percent Change
The month-over-month and year-over-year results are headed the wrong way.
The year-over-year CPI was 2.4 percent in September. It’s now 3.0 percent, up 0.6 percentage points.
The Personal Consumption Expenditures (PCE) price index for January has not yet been posted.
CPI Year-Over-Year Percent Change
This BLS report was a disaster. The Fed will not be pleased and will not be cutting rates anytime barring an economic collapse.
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