VGSH - Beneath The Skin Of CPI Inflation January: Spike In 'Core Services' Inflation

2024-02-14 06:22:00 ET

Summary

• “Core services” CPI jumped by 0.66% in January from December, or by 8.2% annualized. In this inflation cycle, only three months were worse (April, June, and September 2022).
• “Core CPI,” a measure of underlying inflation that excludes food and energy products, accelerated to an increase of 0.39% in January from December, or 4.8% annualized, the highest since April last year.
• The CPI for food at home – food purchased at grocery stores and markets and eaten off premises – accelerated to a rise of 0.37% for the month (4.5% annualized), the worst increase since January 2023.

But that’s how inflation is, once out of the bottle: It serves up nasty surprises.

We’ll start with the “core services” CPI (services minus energy services) because this is so crucial, and because Powell keeps talking about it. We have been concerned here for months about the refusal of core services inflation to ease off, and we’ve found the acceleration in the fall last year “very disconcerting.” But that’s how inflation is – it tends to serve up nasty surprises. And now it did....

For further details see: