Consumer Price Index Rising Faster

The US Bureau of Labor Statistics reported this morning that the US consumer price index (CPI) rose 0.2% in January and the core inflation index also rose 0.2%. Economists had predicted a rise of 0.3% in the CPI and a rise of 0.2% in core inflation.

The annualized CPI fell slightly, from 3% in December to 2.9% in January, but that’s still well above the Federal Reserve’s targeted inflation rate of 2%. Prices rose in nearly every category, with the exceptions of natural gas, airline fares, and fruits and vegetables.

Core inflation — that is, CPI less food and energy costs — for the past 12 months is up 2.3%, its largest rise since September 2008. Energy costs are up 6.1% in the same period and food costs are up 4.4%.

Crude oil prices have been rising quickly lately on threats by Iran to block shipments out of the Persian Gulf and on hopes for a settlement in the Greek debt crisis. Food inflation is coming from increased input costs, especially for fertilizer and fuel.