- The Consumer Price Index rose 7.5% in the year through January, according to data out Thursday.
- That surpassed the median estimate of 7.3% and marked the strongest inflation since February 1982.
- The index also rose 0.6% month-over-month, hinting the Omicron wave added to inflationary pressures.
New year, same historic inflation.
The Consumer Price Index – a commonly used measure of US inflation – rose 7.5% year-over-year in January, the Bureau of Labor Statistics announced Thursday morning. That came in above the median forecast of a 7.3% gain from economists surveyed by Bloomberg. It also marks the strongest price growth since February 1982 and an acceleration from the December pace of 7.1%.
The report officially brings the inflation problem of 2021 into the new year. Economists largely expect price growth to cool in the coming months as demand wanes and global supply chains heal. Yet the Thursday data show prices continuing to surge in January as the Omicron wave crested at record-high infections.
The index gained 0.6% month-over-month, surpassing the average forecast of a 0.5% leap. The print also shows inflation holding at December's 0.6% pace. The one-month print can offer more insight into how inflation will trend moving forward, since the year-over-year comparison still includes months where vaccines were only just rolling out and many economic restrictions were still in place.
Core CPI, which cuts out volatile food and energy prices, rose 0.6% through January, matching December's rate and overshooting the 0.5% forecast. The core index is largely viewed as a more accurate measure of broad inflation trends, and the lack of a month-over-month deceleration signals supply is still far from matching demand.
Fuel oil prices rose the most through January, notching a 9.5% gain after falling 2.4% the month prior. Electricity followed with a 4.2% price surge. Used car and truck prices rose 1.5% last month, slowing from December's 3.3% gain but still marking a sizeable uptick compared to pre-pandemic trends.
The report joins other data revealing how the economy fared through the worst virus wave yet. Daily infections peaked at roughly 1.4 million on January 10 and have since plunged to an average of 225,000. Last week's jobs report dashed fears that surging case counts would throw off the recovery, as the US added far more jobs than expected and labor force participation swung higher. With infections steadily declining, January might represent the worst month of the virus' economic fallout in 2022, barring the rise of further variants.
A new policy strategy also stands to rein in price surges. The Federal Reserve is poised to start raising interest rates after holding them at record lows since the pandemic's onset in early 2020. The Federal Open Market Committee is "of a mind" to start hiking rates at its March meeting to more effectively fight inflation, Fed Chair Jerome Powell said in a January 26 press conference, adding the economy has recovered enough to warrant reining in such aid.
"In light of the remarkable progress we've seen in the labor market and inflation that is well above our 2% longer-run goal, the economy no longer needs sustained high levels of monetary policy support," Powell said.
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