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Prices Rose More Than Expected in January as Inflation Won’t Go Away

The comments below are an edited and abridged synopsis of an article by Jeff Cox, CNBC

Inflation rose more than expected in January as stubbornly high home prices weighed on consumers, according to the US Labor Department.

Prices Rose More Than Expected in January as Inflation Won’t Go Away - BullionBuzz - BMG
Close-up on a woman looking at a receipt after shopping at the supermarket – cost of living concepts

The consumer price index increased 0.3% for the month. On a 12-month basis, that came out to 3.1%, down from 3.4% in December.

Stocks slid sharply following the release of this news, and Treasury yields surged higher.

Economists had been looking for a monthly increase of 0.2% and an annual gain of 2.9%.

Excluding food and energy prices, the core CPI accelerated 0.4% in January and was up 3.9% from a year ago, unchanged from December. The forecast had been for 0.3% and 3.7%, respectively.

Housing, which comprises about one-third of the CPI weighting, accounted for much of the rise. The index for that category climbed 0.6% on the month, contributing more than two-thirds of the headline increase. On a 12-month basis, shelter rose 6%.

Food prices moved higher as well, up 0.4% on the month. Energy helped offset some of the increase, down 0.9% due largely to a 3.3% slide in gasoline prices.

Stock market futures fell sharply following the release. Futures tied to the Dow Jones were off more than 250 points and Treasury yields surged higher.

Even with the rise in prices, inflation-adjusted hourly earnings increased 0.3% for the month. However, adjusted for the decline in the average workweek, real weekly earnings fell 0.3%. Real average hourly earnings rose 1.4% from a year ago.

The release comes as the Fed looks to set the proper balance for monetary policy in 2024.