Note from dshort: I'm flying back from a semi-vacation in southern California to my home/office in Raleigh and will be offline for several hours without Internet access on my American Airlines flight. So aside from this high-level update much of my detailed analysis of inflation will be delayed until tomorrow, including my real (inflation-adjusted) retail sales per capita.
The Bureau of Labor Statistics released the latest CPI data this morning. Year-over-year unadjusted Headline CPI came in at 1.58%, which the BLS rounds to 1.6%, up from 1.58% last month. Year-over-year Core CPI (ex Food and Energy) came in at 1.62% (rounded to 1.6%), down from last month's 1.72%.
Here is the introduction from the BLS summary, which leads with the seasonally adjusted data monthly data:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.
Increases in the indexes for household energy accounted for most of the all items increase. The electricity index posted its largest increase since March 2010, and the indexes for natural gas and fuel oil also rose sharply. These increases more than offset a decline in the gasoline index, resulting in a 0.6 percent increase in the energy index.
The index for all items less food and energy also rose 0.1 percent in January. A 0.3 percent increase in the shelter index was the major contributor to the rise, but the indexes for medical care, recreation, personal care, and tobacco also increased. In contrast, the indexes for airline fares, used cars and trucks, new vehicles, and apparel all declined in January. The food index rose slightly in January. The index for food at home rose 0.1 percent, with major grocery store food groups mixed.
The all items index increased 1.6 percent over the last 12 months; this compares to a 1.5 percent increase for the 12 months ending December. The index for all items less food and energy has also risen 1.6 percent over the last 12 months. The energy index has risen 2.1 percent over the span, and the food index has increased 1.1 percent. More...
The Investing.com consensus forecasts for both headline and core Month-over-Month was 0.1% and 1.6% for both for Year-over-Year.
The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since 1957. The second chart gives a close-up of the two since 2000.
On the chart below I've highlighted 2 to 2.5 percent range. Two percent has generally been understood to be the Fed's target for core inflation. However, the December 12 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low Fed Funds Rate and quantitative easing) are in place.
Federal Reserve policy, which has historically focused on core inflation, and especially the core Personal Consumption Expenditures (PCE), will see that the latest core CPI remains below the near-term target range of 2 to 2.5 percent, and the more volatile headline inflation, further below the target range.