By Susan A. Baird
PBN Web Editor
WASHINGTON – U.S. consumer prices rose last month at a faster pace than in December, according to a report today from the U.S. Department of Labor’s Bureau of Labor Statistics. The bureau’s Consumer Price Index for All Urban Consumers (CPI-U) rose a seasonally adjusted 0.4 percent in January compared with the month before, matching December’s revised 0.4-percent gain.
Analysts had expected the CPI-U to rise 0.3 percent in January, matching the bureau’s initial December estimate, based on the median forecast from a Bloomberg News survey of 74 economists. (Their predictions called for an increase of 0.1 percent to 0.4 percent.)
Compared with December, the energy index rose 0.7 percent last month – slowing to less than half its 1.7-percent increase the month before – or 0.4 percent excluding energy services, the BLS said.
Food prices rose 0.7 percent, accelerating from a December gain of 0.1 percent that was the slowest since December 2006.
The core CPI-U excluding food and energy prices rose 0.3 percent in January – exceeding the Bloomberg forecast’s 0.2-percent estimate – after rising 0.2 percent in December.
Transportation costs rose 0.5 percent, slowing from December’s 1.0-percent gain, as gasoline costs increased 1.2 percent, although they remained 2.1 percent below their peak last May. The cost of medical care also rose 0.5 percent in January. Apparel costs and education and communication expenses rose 0.4 percent, while housing and recreation costs edged up 0.2 percent, the BLS said.
Compared with January 2007, the CPI-U rose 4.3 percent to 211.080 points (1982 to 1984 = 100), accelerating from December’s 4.1-percent year-over-year gain, the BLS said. Food prices rose 4.9 percent while energy prices surged 19.6 percent. The core rate excluding food and energy rose 2.5 percent, in its sharpest increase since March, after rising 2.4 percent in 2007.
Inflation is “uncomfortably high,” Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg News. “Once the U.S. economy looks like it’s started to stabilize, [the Federal Reserve will be] rates back up to neutral, because inflation is not going away.”
In the Northeast last month, the CPI-U rose to 221.325 points, an increase of 0.4 percent from its level in December and 3.9 percent from January 2007.
Meanwhile, American production and nonsupervisory workers’ real earnings – average weekly earnings adjusted for inflation – fell 0.5 percent compared with a month ago, after rising 0.1 percent in December, the BLS said in a separate report.
Average hourly earnings rose 0.2 percent compared with December. That increase partially offset the decline in average weekly hours, which fell 0.3 percent after holding steady for five months, and the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which rose 0.4 percent, matching its December gain.
Compared with January 2007, average weekly earnings rose 3.4 percent – to $592.74, from $573.14 a year earlier – but real earnings adjusted for inflation fell 1.4 percent.
Additional information, including the 21-page Consumer Price Index report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov/cpi; the seven-page Real Earnings report can be found at www.bls.gov/ces.
