Inflation rose 0.5% in January, more than expected

Thanksgiving food prices rising over inflation
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There has been a bump in the road to squash inflation, Axios report.

Inflation turned higher to start 2023, as rising shelter, gas, and fuel prices took their toll on consumers, the Labor Department reported Tuesday.

January’s Consumer Price Index doesn’t suggest inflation is reheating in a major way. But it does preview the path to getting prices under control.

But that path may be longer, more uneven than desired, and also more than it was in the final months of 2022. 

In the last few months, markets have been more confident now that price pressures are on a steady glide path downward.

The new numbers are nothing worth panicking about and were broad as expected by forecasters. 

But they are a reminder that there are two-sided risks to inflation, with no guarantees that disinflation will be as consistent and painless as it has been in recent months.

The consumer price index, which measures a broad basket of common goods and services, rose 0.5 percent in January, which translated to an annual gain of 6.4 percent. 

Economists had been looking for respective increases of 0.4 percent and 6.2 percent, making the increase a bit more than expected, according to CNBC.

While price increases had been abating in recent months, January’s data shows inflation is still a force in a U.S. economy in danger of slipping into recession this year.

That has come despite Federal Reserve efforts to quell the problem. The central bank has hiked its benchmark interest rate eight times since March 2022 as inflation rose to its highest level in 41 years last summer.

The story about core inflation boils down to shelter costs. That index accounted for nearly 60% of the total increase in the core CPI index over the last 12 months, the Labor Department said.

This year, the inflation story is zeroed in on the services sector, which may offer more surprising stickiness.

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