Inflation Report

Yesterday’s CPI release showed that inflation continues to gallop ahead at a rather high rate, though once again, most of the rise was attributable to higher energy prices. Marketwatch offers this assessment:

WASHINGTON (MarketWatch) — U.S. consumer prices increased a larger-than-expected 0.7% in January, led by higher energy, food and housing costs, the Labor Department said Wednesday. The core consumer price index — which excludes food and energy prices — increased 0.2% last month, as expected.

…Economists surveyed by MarketWatch had expected the CPI to rise 0.5% in January, after falling by 0.7% in November and by 0.1% in December. In the past 12 months, the CPI has risen 4%. The core CPI is up 2.1% over that time, near the top end of the Fed’s presumed comfort zone, but this was down from 2.2% in December.

The personal consumption expenditure price index, the Fed’s preferred gauge for tracking inflationary activity, will be released by the Commerce Department next week. The core PCE price index has risen 1.9% in the past year. With the CPI up 0.7%, real or inflation-adjusted weekly earnings fell 0.2% in January, the department said in a separate report. In the past year, average weekly earnings have risen 3.6%, but prices have increased 4%. Inflation-adjusted earnings fell 0.4%. Real average hourly earnings are down 0.7% in the past year.