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| January Consumer Prices (Revised GRA Update) - Feb. 22, 2006 |
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Summary
The Labor Department reported this morning that consumer prices in January rose 0.7%, which compared with December's decline of 0.1%. During January, the CPI's so-called "core" rate, which excludes food and energy, rose 0.2%. This compared with December's reported gain of 0.1%.
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* The Labor Department reported this morning that the Consumer Price Index rose 0.7% during January, which compared with a 0.1% decline in December.
* The January increase was led by a 5.0% gain in energy prices, reversing this sector's two months of declines (minus 2.1% in December, minus 8.1% in November).
* Excluding food and energy, or the so-called "core" rate, the CPI rose 0.2% during January.
* The consensus estimates for the overall as well as core results were around 0.5% and 0.2%, respectively.
* For the 12 months ended January 2006, the overall CPI stood 4.0% higher than a year earlier. During the 12 months ended January 2005, this figure was +3.0%, indicating that the CPI's above-average change of the last couple years not only has persisted, it also has accelerated.
* The 12-month change in the CPI's core rate as of January 2006 was 2.1%, which compared with a 2.3% gain for the 12 months ended January 2005. Nevertheless, I continue to de-emphasize the far more moderate changes in the "core" CPI over the last couple to few years, since in an economy that consumes as much energy and food as ours does, the "core" CPI is little more than a foolish measure constructed primarily to provide Washington and Wall Street the means of trying to fool people about their true cost of living.
Now that the Labor Department has released the third and last of the government inflation series we follow closely each month (import prices, PPI and CPI), I will publish a more detailed statistical summary of all three measures, which will incorporate the annual revisions the Labor Department has just made. I will also update the "Inflation Watch" graph on the home page of the GRA website.
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