Finally, the US Fed may be about to have its desire for inflation fulfilled. Consumer inflation has risen, in terms of both the headline consumer price index (CPI) and core CPI. January CPI figures released by the Bureau of Labor Statistics indicate consumer prices rose by 0.6% for the month, or double December’s 0.3% and well above the consensus market forecast of 0.3%. On a year-on-year basis, the CPI increased by 2.5%, well up on December’s comparable figure of 2.1%. Core prices, the measure of prices which strips out food and energy prices changes, rose 0.3% for the month and more than the 0.2% expected. Over the last 12 months, core inflation edged up to 2.3% from December’s 2.2% (seasonally adjusted).
According to the Bureau, half the rise in the overall price level was driven by fuel prices, with housing, clothing and new vehicles also major contributors. In the core CPI measure, prices of clothing, new vehicles, car insurance and airfares all increased noticeably. ANZ Research made the observation the numbers were “largely positive. Inflation is normalizing, but a smoking gun of a sustained trend higher is still to materialise.”