ARLINGTON, Va.—On a seasonally-adjusted basis, overall consumer prices rose 0.3% in January, with the Bureau of Labor Statistics reporting the overall consumer price index (CPI) grew 1.4% over the 12-month period.
NAFCU Chief Economist and Vice President of Research Curt Long noted that most of the inflation was concentrated in energy and apparel prices.
"With ample fiscal support from Congress and persistent supply constraints, there is still the possibility that price pressures could spike at some point this year,” said Long. “But the Federal Reserve would likely view it as transient, resisting any calls to raise rates in response. Given the state of the labor market, inflation is not going to precipitate a rate hike in the foreseeable future.”
Energy prices rose 3.5% during the month, following a 2.6% increase in December. From a year ago, energy prices were down 3.8%, however. In addition, food prices climbed 0.1% in January and are up 3.8% compared to this time last year.
Long also highlighted that new and used vehicle prices declined 0.5 and 0.9%, respectively.
Core prices (excluding food and energy costs) remained flat compared to December. Year-over-year core CPI growth was 1.4%.
Fed Chief Weighs In
In a speech this week before the Economic Club of New York, Federal Reserve Chair Jerome Powell emphasized both the distributional benefits of a tight labor market and the distance that still remains to reach that goal, said Long.
“He posited that the true unemployment rate is not the 6.3% official number, but closer to 10%, recognizing misclassifications and exits from the labor force,” continued Long. “This is the most dovish Fed in recent history, and it is clearly committed to snuffing out any whiff of policy tightening.”