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US inflation was complicated:

The price index was up 6.4 percent in January compared with a year earlier. That was a slight slowing from 6.5 percent in December, and is down notably from a peak of about 9 percent last summer. But compared with the previous month, prices climbed 0.4 percent after stripping out groceries and fuel — a rapid pace of growth that matched the increase in December.

The overall report shows that while the Federal Reserve has been receiving positive news on inflation, price increases are no longer relentlessly accelerating, the way they did for much of 2021 and the first half of 2022, it could be a long and bumpy road back to the 2 percent annual inflation gains that used to be normal.
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Much of the inflation slowdown in recent months has come from a moderation in price increases for goods and commodities. After stripping those out, services inflation — which includes health care, restaurant meals, pedicures and other non-goods purchases — has remained unusually rapid and has shown little sign of slowing down.

That trend continued in January, with services prices excluding energy continuing to increase rapidly, partly owing to the jump in rental and other housing costs. A measure that Mr. Powell watches closely — one that tracks services and strips out housing in addition to food and gas — eased very slightly last month.
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Monthly growth in food prices accelerated slightly in January, reversing a gradual decline seen in recent months, as the price of eggs, cookies and citrus fruits all rose.

Food prices grew 0.5 over the month, ticking up slightly compared with an increase of 0.4 percent in December. A price index for meats, poultry, fish and eggs increased in January, as did another for cereals and bakery products. An overall index for fruits and vegetables fell from the previous month, while an index for dairy products was unchanged.

The price of eggs was up 8.5 percent from the previous month, the Bureau of Labor Statistics said, as an outbreak of avian influenza around the United States continues to cause egg prices to surge. However, other measures, like a market report compiled by the Agriculture Department, show that the price of eggs has been dropping sharply in recent months. The average price of large eggs dropped from more than $5 a carton earlier this year to less than $3 in February, the department said.

And the New York Fed released their Underlying Inflation Gauge:

• The UIG “full data set” measure for January is currently estimated at 5.1%, a 0.3 percentage point decrease from the current estimate of the previous month.
• The “prices-only” measure for January is currently estimated at 5.1%, a 0.3 percentage point decrease from the current estimate of the previous month.
• The twelve-month change in the January CPI was +6.4%, a 0.1 percentage point decrease from the previous month.
  • -For January 2023, trend CPI inflation is estimated to be in the 4.2% to 5.1% range, a similar range to December, with a 0.3 percentage point decrease of both its lower and upper bound.

This entry was posted on Tuesday, February 14th, 2023 at 8:28 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.