U.S. and India Inflation Rates Moderate Slightly in January
By The U.S. inflation rate moderated slightly in January, coming in at 6.4% according to the latest data from the Bureau of Labor Statistics (BLS) released on Tuesday.[0] This was down from the 6.5% reading in December, but still much higher than the 2.1% average in the three years before the pandemic. Core inflation, which strips out volatile food and energy prices, was at 5.6% in the year ending in January – the smallest increase since December 2021.[1]
According to the CPI report, prices for used cars decreased by 1.9%, while prices for new cars increased by 0.2%.[2] The Bureau of Labor Statistics (BLS) reported that housing prices were the primary factor in the monthly increase in overall inflation.[3] In January, the shelter index rose by 7.9% compared to the same month in the previous year.[4] The prices had an increase of 0.5% compared to the previous month, ending a period of three months of improvement that started after the December report, which showed the largest decrease in monthly inflation since April 2020 when the pandemic was at its peak.[1]
The annual rate of inflation remained high despite moderating slightly from December's reading.[5] The January 2023 Survey of Consumer Expectations conducted by the New York Fed revealed that the median inflation expectations for the year ahead remained unchanged at 5%.[6] Prices for food at home rose a more moderate 0.4% on the month.[5]
In less than twelve months, the Federal Reserve has taken decisive action by increasing borrowing rates to a target range of 4.5% to 4.75%. This is part of their effort to curb surging prices.[7] If inflation remains at a rate higher than the Federal Reserve's goal of 2%, such as between 4-5%, the Fed may have to increase rates higher than expected and maintain that level for a considerable time.[5]
India’s headline retail inflation is also likely to have returned to 6-percent plus territory in January from December's one-year low of 5.72 percent. In January 2021, India's retail inflation rate rose back to 6.52%, after staying below 6% for two consecutive months. Consumer food prices rose to 5.94%, compared to 4.2% in December 2022, and prices of goods and services across the board began to increase.
0. “US CPI climbed 6.4% in January as inflation is still high” Business Insider, 14 Feb. 2023, https://www.businessinsider.com/how-high-is-inflation-cpi-report-january-price-growth-2023-2
1. “Inflation Fell To 6.4% In January—But Is Still Worse Than Economists Expected As Rent, Food And Gas Prices Keep Rising” Forbes, 14 Feb. 2023, https://www.forbes.com/sites/jonathanponciano/2023/02/14/inflation-spiked-64-in-january-worse-than-economists-expected-as-rent-food-and-gas-prices-keep-rising
2. “CPI Inflation Comes In Hot, Keeping Fed On Guard” Investor's Business Daily, 14 Feb. 2023, https://www.investors.com/news/economy/cpi-inflation-comes-in-hot-keeping-fed-on-guard-sp-500
3. “Consumer price index January 2023:” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/14/consumer-price-index-january-2023-.html
4. “Inflation surged 6.4% in January, higher than expected” New York Post , 14 Feb. 2023, https://nypost.com/2023/02/14/inflation-surged-6-4-in-january-higher-than-expected/
5. “CPI shows U.S. inflation still sticky” MarketWatch, 14 Feb. 2023, https://www.marketwatch.com/story/cpi-shows-u-s-inflation-still-sticky-e08c9671
6. “Live updates: Stocks rise as annual inflation keeps falling” CNN, 14 Feb. 2023, https://www.cnn.com/business/live-news/stock-market-news-inflation/index.html
7. “Monthly U.S. inflation accelerates in January, annual figure 6.4% By Investing.com” Investing.com, 14 Feb. 2023, https://www.investing.com/news/economic-indicators/monthly-us-inflation-accelerates-in-january-annual-figure-64-3002904
