U.S. Consumer Price Growth Accelerates More Than Expected In January

The annual rate of U.S. consumer price growth accelerated more than expected in the month of January, the Labor Department revealed in a highly anticipated report on Thursday.

The report showed consumer prices in January were up by 7.5 percent compared to the same month a year ago, reflecting the fastest annual growth since February of 1982.

Economists had expected the annual rate of consumer price growth to accelerate to 7.3 percent from 7.0 percent in December.

Dr. Christoph Balz and Bernd Weidensteiner, Senior Economists at Commerzbank, said the inflation rate is unlikely to have peaked but they expect only slightly higher rates in the coming months.

“This is because the year-on-year rate will only rise if prices increase more strongly from month to month than in the same month in 2021,” said Balz and Weidensteiner. “This seems likely for February, where the increase in 2021 was only 0.4%.”

“However, in March and April (2021: +0.6% in each case) and May (2021: +0.7%) the bar is so high that it will probably only be cleared in the event of further exorbitant price increases for energy,” they added. “And this is only likely in the event of an escalation of the Ukraine conflict.”

The faster year-over-year growth came as the Labor Department said its consumer price index climbed by 0.6 percent in January, matching the upwardly revised advance seen in December.

Economists had expected consumer prices to rise by 0.5 percent, matching the increase originally reported for the previous month.

The bigger than expected monthly increase in consumer prices reflected higher prices for food, electricity, and shelter.

The report showed core consumer prices, which exclude food and energy prices, also advanced by 0.6 percent in January, matching the increase seen in December. Economists had also expected core prices to rise by 0.5 percent.

Along with higher prices for shelter, the increase in core pries reflected higher prices for household furnishings and operations, used cars and trucks, medical care and apparel.

The annual rate of growth in core prices accelerated to 6.0 percent in January from 5.5 percent in December, showing the biggest jump since August of 1982.

Next Tuesday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of January.

Producer prices are currently expected to rise by 0.4 percent in January after edging up by 0.2 percent in December, while the annual rate of growth is expected to inch up to 9.8 percent from 9.7 percent.

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