Inflation Continues Downward Trend
The rate of inflation continued on a downward trend in the year-ending January, as climbing interest rates put a damper on rising prices. For the seventh month in a row, inflation has been easing on a year-over-year basis. In January, the annual inflation rate hit its lowest point in 15 months, but consumer price increases are still near 40-year highs. The Consumer Price Index (CPI) for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, was up 6.4% on an annual basis in January 2023, according to the Bureau of Labor Statistics. While that was slightly above economists’ expectations (6.2%), it was lower than the 6.5% annual increase in December and well below the 9.1% hike in June, which was the biggest year-over-year jump in prices since November 1981. Still, inflation has now remained at or near 40-year highs for 15 consecutive months, the biggest price surges since the severe economic recession of 1981-1982. Looking at commodities, the energy index rose 8.7% during the year-ending January, with the price of gasoline up just 1.5% from a year ago. Food prices increased 10.1% over the past year, but the price of eggs skyrocketed, climbing 70.1% year-over-year. Contributing to the lower inflation rate, the cost of used cars and trucks plummeted 11.6% over the past year. Meanwhile, price increases in airline fares (+25.6%), while easing, remain stubbornly high. Shelter, which accounts for about one-third of the total CPI index, saw a 7.9% year-over-year price surge in January, the biggest annual gain in over 40 years.