Published Feb 14, 2023 In January, inflation eased for the seventh consecutive month, aided by lower costs for used vehicles. The Consumer Price Index data revealed that prices for various goods and services increased by 6.4% over the past year, a slight decrease from December’s annual rate of 6.5% and a 40-year peak of 9.1% in June. However, monthly prices rose by 0.5% in January, driven by shelter expenses, compared to a slower gain of 0.1% in December. High inflation has resulted in a decrease in real income value for Americans, despite historic wage hikes, and poses a risk of a recession. The latest inflation data highlights the challenges faced by the Fed, and while inflation may have peaked, it is not showing signs of rapidly returning to the Fed’s 2% inflation target. To achieve the target, the Fed will likely have to raise rates higher and for longer than expected. According to the report by the Bureau of Labor Statistics, increasing shelter costs were responsible for approximately half of the monthly rise. The shelter costs account for over a third of the index, having increased by 0.7% in a month and 7.9% from a year ago. Energy costs, up 2% and 8.7% respectively, and food costs, which increased by 0.5% and 10.1%, respectively, were also significant contributors. The CPI had only risen by 0.1% in December. The CPI (Consumer Price Index) is a measure of the average change over time in the prices paid by consumers for a market basket of goods and services. The CPI is commonly used as a gauge of inflation, and it is calculated and reported on a regular basis by various government agencies in many countries around the world. The CPI is based on surveys of consumer prices and is used to track changes in the cost of living, as well as to adjust wages, social security benefits, and other payments for inflation.About the Consumer Price Index (CPI)
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