- US inflation jumped to a new 40-year record high.
- Core inflation highest since August 1982
Consumer price inflation in the United States rose at an annual rate of 7.5% in January, beating analysts’ estimates of 7.3%, the Bureau of Labor Statics said on Thursday. That is the fastest pace since February 1982 as soaring energy costs, labour shortages, and supply disruptions coupled with strong demand weigh. Core CPI rose 6%, the most since August of 1982. On a monthly basis, consumer prices increased 0.6%, in line with market estimates. When measured from December to January, inflation was 0.6%, the same as the previous month and above market expectations. Prices had risen 0.7% from October to November and 0.9% from September to October. The January reading includes changes in seasonal adjustment factors with the bigger weight given to used cars and trucks and a smaller one for food away from home, but the calculations did not affect unadjusted data.
A key inflation gauge, the Consumer Price Index, rose 7.5% from a year ago, which is the largest increase since February 1982, well above the FED target. Core inflation, which strips out volatile food and energy costs, was 6%. Source: XTB research, Macrobond
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Energy remained the biggest contributor (27% vs 29.3% in December), with gasoline prices surging 40% (49.6% in December). Inflation accelerated for shelter (4.4% vs 4.1%); food (7% vs 6.3%), namely food at home (7.4% vs 6.5%); new vehicles (12.2% vs 11.8%); used cars and trucks (40.5% vs 37.3%); and medical care services (2.7% vs 2.5%). . Source: XTB research, Macrobond
Inflation may remain high in the near future, in part reflecting the delayed impact of rising wages. Employers are boosting compensation as they compete for scarce workers. However real average hourly earnings rose just 0.1% for the month, as the 0.7% monthly gain in wages was almost completely wiped out by the 0.6% inflation gain.
For the Federal Reserve, which at least in theory is responsible for keeping prices stable, today's report will likely not change much. At the end of 2021 FED started to wind down its pandemic stimulus program and Chair Powell signaled recently that the central bank would likely raise its benchmark short-term rate multiple times this year, with the first hike almost surely coming in March.
