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The Labor Department reported that consumer prices rose
0.4 percent in January after a gain of 0.4 percent in December and, despite
soaring energy prices and steadily rising medical costs, overall inflation on
a year-over-year basis now stands at just 1.6 percent.
 
The U.S. remains the envy of the rest
of the world, in the unique position of being able to borrow and print money
on a scale Mankind has never seen before – importantly, pumping up
asset prices in the process – while global food inflation reaches
record highs.
The January reading on consumer prices
came in just above consensus estimates of 0.3 percent while “core
inflation” – excluding food and energy – was 0.2 percent
for the month, up just 1.0 percent from a year ago.
By category, it was the familiar story
of surging energy prices being offset by modest price increases elsewhere as
shown below. The cost of gasoline rose 3.5 percent in January, now up 13.4
percent from a year ago, and heating oil rose 5.4 percent last month,
however, household energy costs actually fell
by 0.2 percent in January, presumably due to falling natural gas prices.
Overall, energy prices increased 2.1
percent, now 7.3 percent higher on a year-over-year basis, and the food price
inflation that plagues the rest of the world has yet to have an impact in the
U.S., food prices rising 0.5 percent in January, up 1.8 percent from a year
ago.
One surprising tidbit from the detailed
CPI data
just stumbled upon this morning is the relative weight of the “Food at
home” and “Food away from home” categories that represent
7.8 percent and 5.9 percent, respectively, of the overall Consumer Price
Index. This is likely one more reason why it’s much more difficult to
print big food inflation numbers in the U.S. than in other parts of the world
– because Americans eat out much more where there is less of a direct
link between rises in commodity prices and increases in menu prices.
Tim Iacono
Iacono Research.com
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