Updated: Mar 30
Largest 12-month increase since the period ending February 1982
Consumer Price Index Summary
CONSUMER PRICE INDEX – JANUARY 2022 The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 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 7.5 percent before seasonal adjustment. Increases in the indexes for food, electricity, and shelter were the largest contributors to the seasonally adjusted all items increase. The food index rose 0.9 percent in January following a 0.5-percent increase in December. The energy index also increased 0.9 percent over the month, with an increase in the electricity index being partially offset by declines in the gasoline index and the natural gas index. The index for all items less food and energy rose 0.6 percent in January, the same increase as in December. This was the seventh time in the last 10 months it has increased at least 0.5 percent. Along with the index for shelter, the indexes for household furnishings and operations, used cars and trucks, medical care, and apparel were among many indexes that increased over the month. The all items index rose 7.5 percent for the 12 months ending January, the largest 12-month increase since the period ending February 1982. The all items less food and energy index rose 6.0 percent, the largest 12-month change since the period ending August 1982. The energy index rose 27.0 percent over the last year, and the food index increased 7.0 percent.
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Food The food index increased 0.9 percent in January. The food at home index increased 1.0 percent over the month after rising 0.4 percent in December. Five of the six major grocery store food group indexes increased in January. The index for cereals and bakery products increased the most, rising 1.8 percent over the month. The index for other food at home increased 1.6 percent in January, while the index for dairy and related products rose 1.1 percent. The fruits and vegetables index rose 0.9 percent over the month, and the meats, poultry, fish, and eggs index increased 0.3 percent. The only grocery store group index not to increase in January was the index for nonalcoholic beverages, which was unchanged. The food away from home index rose 0.7 percent in January following an increase of 0.6 percent in December. The index for full service meals and the index for limited service meals both also rose 0.7 percent over the month. The food at home index rose 7.4 percent over the last 12 months. All of the six major grocery store food group indexes increased over the period. By far the largest increase was that of the index for meats, poultry, fish, and eggs, which rose 12.2 percent over the year. The index for dairy and related products increased 3.1 percent, the smallest 12-month increase among the groups. The index for food away from home rose 6.4 percent over the last year, the largest 12-month increase since January 1982. The index for limited service meals rose 8.0 percent over the last 12 months, and the index for full service meals rose 7.1 percent. The index for food at employee sites and schools, in contrast, declined 46.9 percent over the past 12 months, reflecting widespread free lunch programs. Energy The energy index increased 0.9 percent in January. The electricity index rose sharply in January, increasing 4.2 percent. The gasoline index fell 0.8 percent in January after rising rapidly in the autumn of 2021. (Before seasonal adjustment, gasoline prices rose 0.1 percent in January.) The index for natural gas also declined in January, falling 0.5 percent after declining 0.3 percent in December. The energy index rose 27.0 percent over the past 12 months with all major energy component indexes increasing. The gasoline index rose 40.0 percent over the last year, despite declining in January. The index for natural gas rose 23.9 percent over the last 12 months, and the index for electricity rose 10.7 percent. All items less food and energy The index for all items less food and energy rose 0.6 percent in January, the same increase as December. The shelter index increased 0.3 percent in January as the rent index increased 0.5 percent and the owners’ equivalent rent index rose 0.4 percent. The index for household furnishings and operations rose 1.3 percent over the month following a 1.1-percent increase in December. The used cars and trucks index rose 1.5 percent in January, a deceleration from the 3.3-percent increase reported in December. The medical care index rose 0.7 percent in January. The index for hospital services increased 0.5 percent and the index for prescription drugs rose 1.3 percent, while the index for physicians’ services declined 0.1 percent. Other indexes that rose in January include recreation (+0.9 percent), apparel (+1.1 percent), personal care (+1.0 percent), airline fares (+2.3 percent), and education (+0.2 percent). Only a few indexes decreased in January; among those that did were lodging away from home (-3.9 percent) and wireless telephone services (-0.1 percent). The index for new vehicles was unchanged over the month. The index for all items less food and energy rose 6.0 percent over the past 12 months. Major contributors to this increase include shelter (+4.4 percent) and used cars and trucks (+40.5 percent). However, the increase is broad-based, with virtually all component indexes showing increases over the past 12 months.
Shortly after the CPI Release a statement from Fed member Bullard: Mindful of inflation’s potential to “mess up economic performance”
St. Louis Fed president on studying the cost of inflation as an economist and applying those insights as a policymakerSt. Louis Fed President James Bullard said he favors a 50-basis point interest rate hike, the first increase of that magnitude since 2000, Bloomberg
reported. Still, he said he'd defer to Fed Chair Jerome Powell on the potential for a half-point increase.
U.S. stocks took a leg down after his comments, with the S&P 500 falling 0.7%, the Nasdaq dipping 0.6%, and the Dow down 0.6%. 10-year Treasury yield rises 10 basis points to 2.03%. Fed swaps now see a full point hike over the central bank's next three meetings, Bloomberg said.
"I'd like to see a 100 basis points in the bag by July 1," said Bullard, who is a voter on monetary policy this year.
His comments came as consumer prices tracked higher than expected in January, putting pressure on the central bank to move more aggressively in its path to remove the extraordinary accommodation it's had in place since the pandemic.
Recall that the Fed's key interest rate target range has been at 0.0%-0.25% since early in the pandemic.
The CME FedWatch tool now puts the probability of a 50bps hike at 85.9% vs. a 48% probability soon after the consumer price index showed a 7.5% Y/Y increase in January.
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