The January Consumer Price Index, which measures inflation, increased 0.2%. From a year ago, CPI has risen 2.9%. Below is the graph for CPI's monthly percentage change.
Core inflation, or CPI minus food and energy also increased 0.2% for January. Core inflation has risen 2.3% for the year. This is the highest yearly increase in core inflation since 2008. Core CPI is a Federal Reserve inflation watch number. Below is the graph for the year core inflation change.
Components of core inflation are kind of strange. New vehicles had no price increase, used cars & trucks dropped another -1.0% from last month. This is the 5th month in a row buying a used auto has become cheaper. Airfare dropped, -0.9% from last month. Shelter, all types, increased 0.2% from December. Apparel shot up 0.9% in cost from December. Recreation increased 0.6% from last month and everyone's favorite, educational books and supplies jumped 0.8% in price from December. Smoking just increased another 0.5% in a month. If nicotine addiction doesn't kill ya, the taxes will.
Core CPI's monthly percentage change is graphed below. As we can see, overall, without energy and food, inflation is hitting that magic Federal Reserve target number of 2% per year.
Food and beverages overall increased, 0.2%. The food at home index (think groceries), while unchanged from last month, is up 5.3% for the year. For the year, meats are up 7.2%, fats and oils (really?) have increased 12.7%. This month, fruits & veggies dropped, -1.3%, dairy increased 0.9%, both sugars and fats increased 1.4% and getting drunk (alcohol) just increased 0.8% from December.
Eating out, or food away from home increased 0.4% from December and is up 3.1% from January 2011.
Food getting way too expensive is not in your imagination. $9 bucks for a bad tasting frozen meal? Are you kidding me?
Energy overall increased 0.2%, after plunging for the last 3 previous months. The energy index separates out all energy costs and puts them together. Energy is also mixed in with other indexes, such as heating oil for the housing index and gas for the transportation index. The energy index is still up 6.1% for the year.
Gas alone increased 0.9% for January and is up 9.7% from this time last year. What's interesting is seasonally unadjusted, gas prices jumped 3.6% in January. The transportation index overall increased 0.3%. Gas is part of this index.
Below are gas prices, last updated February 13th. Notice the oil bubble in early 2008 and notice how close gas prices are now to that previous oil bubble. This CPI report is for January 2012 but watching gas prices can gives good indicator on future inflation to come.
Heating your house with gas just got a whole lot cheaper. Utility gas plummeted another -2.9%, the 4th month in a row and is down -5.5% from this time last year. Household energy overall decreased -0.6% this month, but is up 1.2% for the year. Fuel oils for households increased 1.4% and are up 12.1% for the year. Electricity costs were unchanged from December. Seems one great subsidy would be to let people retrofit their homes from heating oil to gas at this point. Below is the CPI-U Energy Index.
The CPI energy index, capturing the last oil bubble below, is all energy, gas, natural gas, fuel oil and so on. Notice it's dip and return versus the food index as well as how it's not as high as the CPI energy index was during the oil commodities bubble of 2008.
The overall Medical index increased 0.3% for the month, and is up 3.6% for the year. Medical care services increased 0.3% and is up 3.7% for the year. Professional services, or Doctors decreased, -0.2% and is up 2.0% from this time last year.
Medical commodities are things like your prescription drugs and it increased 0.6% from last month and is up 3.2% for the year. Advertising costs baby. Medical costs are part of core inflation.
Strange isn't it, that Medical care is never mentioned when referring to costs and inflation. It's only as important as food, yet health care is treated almost like it's an extra for daily living. The reason is the importance ranking in CPI. This is because no everyone gets a serious illness at once (but lord help you if you do), so the average medical expenses spread out of the population are diluted in overall cost of living figures.
There has been much criticism as of late that the Federal Reserve only focuses in on core CPI, instead of food and energy. According to the BLS, Food and beverages, which includes food at home, makes up 14.8% of the index. Housing is 41.5% and transportation, including gas for the car, is 17.3%. Medical care is only 6.6%, they claim. All items minus food and energy are considered 77.2% of the total price expenditures for consumers.....according to them.
The DOL/BLS does take yearly surveys on where the money goes in the monthly budget, but as one can see, food and energy are significant amounts of the monthly finances. Run away costs in these two areas can break the bank, so can food. Additionally CPI uses substitution, so if steak goes through the roof, somehow we're all just fine with hamburger and prices didn't really overall increase much.
CPI-W for the month, unadjusted was 223.216, a 3.1% for the year. CPI-W is used to calculate government transfer payments, such as social security increases.
Last month's CPI report overview, unrevised, although most graphs are updated, is here.
If you're wondering why the graphs look weird, the graph calculates percentages from the index and doesn't round. The actual data from the BLS report does round to one decimal place. In other words, 0.05% is rounded to 0.1%.