Prices keep rising and rising. The Bureau of Labor Statistics reports that CPI, a broad measure of consumer prices, rose an astounding 7.5% on an annual basis in January. It was 7.1% in December and 6.7% in November.
Details: On a month-to-month basis, there is a slight deceleration and leveling. Inflation was 0.6% in January compared to December. It was 0.9% in October, 0.7% in November, and 0.6% in December compared to the months before.
- Prices for food rose 7% on an annual basis in January. Meats, poultry, fish, and eggs rose more than 12%. Energy prices rose 27%. Housing rose a comparably small 4.4%, but data on rents lag, so this will likely rise more in coming months.
Why it matters: These items make up a huge part of families’ budgets. Even though wages and incomes are rising strongly, the higher prices of these necessities are rising faster and making a sizeable dent in families’ budgets. Wages grew 5.7% on an annual basis in January, so in real terms they declined 1.8%.
Looking ahead: There is no hiding that prices have risen much faster since early 2021 than most, including the Federal Reserve, expected. The Federal Reserve will soon start to take action to bring inflation down. Those policy changes will take time to work. In the meantime, expect high inflation through at least the middle of 2022 – at a minimum.
—Curtis Dubay, Senior Economist, U.S. Chamber of Commerce