| Consumer Price Index |
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Released On 2/17/2011 8:30:00 AM For Jan, 2011
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Prior | Consensus | Consensus Range | Actual |
| CPI - M/M change | 0.5 % | 0.3 % | 0.1 % to 0.4 % | 0.4 % | | CPI - Y/Y change | | | | | | CPI less food & energy - Y/Y change | | | | | | CPI less food & energy | 0.1 % | 0.1 % | 0.0 % to 0.2 % | 0.2 % |
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Highlights
Headline CPI inflation continues its trend of outpacing core inflation-largely on strong gains in energy costs but with food price hikes also contributing. The CPI in January increased 0.4 percent, following a 0.4 percent jump in December. The consensus had called for a 0.3 percent gain in January. Excluding food and energy, CPI inflation in January posted at a 0.2 percent rise, compared December's increase of 0.1 percent and exceeding expectations for a 0.1 percent gain.
By major components, energy increased 2.1 percent after jumping 4.0 percent in December. Gasoline rose 3.5 percent, after spiking 6.7 percent the previous month. Food price inflation picked up the pace to 0.5 percent from 0.1 percent in December. Hikes in energy commodities and food accounted for over two thirds of the all items increase.
The firming in the core rate was led by a 1.0 percent jump in apparel and 2.2 percent boost in airline fares. Medical care commodities gained 0.5 percent. On the more moderate side, the shelter index rose 0.1 percent in January, with the rent index increasing 0.2 percent and the index for owners' equivalent rent rising 0.1 percent. Tugging down were declines in new vehicles, down 0.1 percent, used cars and trucks, down 0.3 percent, and medical care services, down 0.1 percent.
Year-on-year, overall CPI inflation increased to 1.7 (seasonally adjusted) from 1.4 percent in December. The core rate rose to 0.9 percent from 0.6 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 1.6 percent in January while the core was up 1.0 percent.
Overall, today's report shows a firming in inflation pressures and points to upward pressure on interest rates.
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Market Consensus before announcement
The consumer price index in December jumped 0.5 percent, following a modest 0.1 percent rise the month before. The December boost was the largest since a 0.7 percent surge in June 2009. Excluding food and energy, CPI inflation came in at 0.1 percent, equaling the rise for November. By major components, energy jumped 4.6 percent, following a 0.2 percent rise in November. Gasoline spiked a monthly 8.5 percent, following a 0.7 percent increase the prior month. Food price inflation actually slowed to 0.1 percent from 0.2 percent in November. As in recent months, shelter helped keep the core rate soft with weakness in motor vehicles also contributing in the latest month.
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Definition
The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. That is the index shows the change in price levels since the index base period, currently 1982-84 = 100. Monthly changes in the CPI represent the rate of inflation.
Why Investors Care
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![[Chart]](showimage.asp?imageid=20418)
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It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the CPI are mainly volatile because of sharp fluctuations in food and energy prices. The core CPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
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![[Chart]](showimage.asp?imageid=20419)
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Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core CPI does not fluctuate as much as the total CPI.
Data Source: Haver Analytics
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