The price of gasoline fell 3.19 percent in January. That won’t last. 
The BLS Consumer Price Index rose 0.2 percent in January vs the expected 0.3 percent.
The better than expected numbers are largely due to a 3.19 percent plunge in the price of gasoline.
The BLS rounds to 1 decimal point. I show 2 decimal places.
CPI Month-Over-Month
- All Items: 0.17 percent
- All Items Excluding Food and Energy: 0.30 percent
- Food and Beverage: 0.18 percent
- Shelter: 0.22 percent
- Medical Care: 0.26 percent
- Energy: -1.47 percent
- Gasoline: -3.19 percent
The CPI rose 0.17 percent. Core CPI (excluding food and energy) rose 3.0 percent.
Most of the difference is the steep decline in gasoline. And that won’t last.
CPI Month-Over-Month Energy, Gasoline, Utilities
Looking ahead, we are not going to see a repeat performance of energy, gasoline, and utilities.
CPI Month-Over-Month Rent and OER
Shelter Components Month-Over-Month
- Rent of Primary Residence: 0.25 percent
- Owners’ Equivalent Rent: 0.22 percent
The trend in shelter is lower but at a diminishing rate. The price of new leases is falling in many areas, but existing leases are still rising.
Owner’s Equivalent Rent is 26.204 percent of the CPI. Rent of primary residence is 7.840 percent of the CPI.
Looking ahead, these are the primary disinflationary pressures.
CPI Month-Over-Month Medical Care
Medical Care Components Month-Over-Month
- Medical Care: 0.26 percent
- Medical Care Services: 0.33 percent
- Medical Care Commodities: -0.6 percent
Medical Care Services is 6.935 percent of the CPI. Medical Care Commodities is 1.489 percent of the CPI.
Medical Care Services is over 82 percent of the Medical Care index.
CPI Month-Over-Month Food
Month-over-month food at home rose 0.19 percent, away from home 0.15 percent.
It’s hard to see much of a trend in food prices month-over-month. However, the year-over-year charts, shown below, shows upward pressure on food prices.
CPI Year-Over-Year Percent Change
CPI Year-Over-Year Percent Change Details
- All Items: 2.4 percent
- All Items Excluding Food and Energy: 2.5 percent
- Food and Beverage: 2.8 percent
- Shelter: 3.0 percent
- Medical Care Services: 3.9 percent
- Utilities and Fuel: 6.1 percent
- Energy: -0.1 percent
CPI Year-Over-Year Select Components
CPI Select Components Year-Over-Year Details
- Utilities and Fuels: 6.1 percent
- Energy: -0.1 percent
- Gasoline: -7.5 percent
- Medical Care: 3.2 percent
I expect all of those components will add significant upward pressure on the CPI month-over-month and year-over-year unless there is a strong recession.
Medical care will add very strong upward pressure, recession or not.
The only potentially offsetting factor is rent. However, rent will is much more important to the CPI than the PCE due to differing weights.
This report may be as good as it gets for a few months. I will posts more charts with an explanation why shortly.
Meanwhile, the labor market is falling apart. The best hope for CPI improvement is continued labor market weakness and a recession.
Related Posts
On December 30, I noted Case-Shiller Home Prices Rise Again, 10-City Index Ties Record High
Hello. Let’s discuss affordability again.
Existing Home Sales
Existing-Home sales have been flat since October of 2022 at roughly 4,000,000 annualized sales for three full years. Only price insensitive buyers have been buying.
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There’s been a huge shift into liquid demand deposits and currency the last 2 months. The demand for money remains high, velocity low.
I wish my medical costs were only 8.5% of my income. I will have an AGI of around $150,000 this year and my medical costs (medical insurance plus treatment costs) were $31,500. Insurance premiums were around $24,000 (including $17,000 for high deductible ($6,000) medical insurance for one 61 year old spouse, $2,000 Medigap insurance, $2,200 for Medicare Part B, and $3,000 for LTC insurance for both of us). Treatment costs were about $10,000 since we didn’t go over the deductible. So for me, medical expenses were around 21% and that is with one person on Medicare.
Had a look at table R-1 today. 39% response rate for the Medical Care category. 58% for apparel. 66% for Other Goods. My understanding is a lot of this is now automated api scrapes or direct purchase of composite sales/revenue data from stores, ie not free.
What are you talking about? Core services including both shelter and supercore both dropped to the lowest level since 2021, that was not the key driver?
You all drive electric cars! So much for cheaper gas prices … Electricity keeps going up.
Every time yields are about to break upwards a magic inflation report come out to push them back down again. How anyone can trust the US to buy their debt is beyond reason, the real inflation rate is far far higher than any numbers they release. The last scam before the end of the US is to screw their lenders. Real inflation is north of 5% & rising.
Fiat money! We are doomed! Gold! LOL
High real wage growth and low CPI inflation. I’m sure that statements like “1 + 1 = 3” were also in the report, but someone prudently edited them out because they were “too obvious” for people to believe.
The thing with these inflation reports is that they are backward looking. What does the future hold?
Utilities and fuels at 6.1 percent should be alarming since electricity is used every single day everywhere. I suspect that electricity will become the new screeching call of most because there are tons of data centers and chips that need to be powered.
The problem will go exponential as a result of Trump’s hostility toward wind and solar too. If Iranian oil goes offline then expect energy costs to surge across the board.
Energy definitely backward looking.
The decline in shelter may continue.
But health care is set to explode higher, especially in the PCE
My personal electricity rate has already gone hyperbolic, from 12.2c per kwatt-hour last January to 15c this year. 23% for me.
Dear Jake
My statement was about M/M and it was accurate.
Core CPI was +0.3 proving my point.
As for Y/Y, that was due to an easy comparison 1 year ago of +0.43
So… 0.17 – 0.43 = -0.26 Y/Y which had nothing to do with the 0.17 report for January.
You stand corrected and I expect an apology.
You have become the punchline to a joke. Look, fella, I am no fan of Trump. Never voted for him. Write-in for the last three presidential elections. But you are absolutely OBSESSED, and it has made you fill your website with absurd rants. Is it the cosmic rays? LOL
p.s.: I checked in only to see what twisted crap you’d put here, not to mention your knee-jerk peanut gallery. Wasn’t disappointed.
Translation of JakeJ’s post:
“I get it Mish, our government is covering for Gestapo agents and child rapists. Stop whining about it and tell me how I can make money from it!”
I think he should see if Rachel Maddow will make him her go-to knee-jerk “economist,” and all-around expert on Bad Bunny, Epstein, the mid-term elections, Tulsi Gabbard, ICE, and Daily Two-Minutes-Hate of Trump. And here I had taken Mish seriously. Hey, things change, and it’s not me who changed.
Good luck, Mike. Maybe they’ll get you on their shows just before “MSNOW” turns off the lights.
Sorry, apparently I didn’t make it clear that I was mocking you.
I think Mish’s blog is great. If I didn’t, I sure as hell wouldn’t be here reading it.
Sorry, apparently I didn’t make it clear that I was laughing in your face. I come here 10% of how often I used to, purely to laugh at it. I’ll be gone soon enough, laughing all the way. This blog is like so many others: a silo, preaching to the choir. Sing it! LOL
You should have made your comment in a more politically themed post by Mish. Your comment stated that he made a CPI calculation incorrectly, Mish showed that he didn’t, and then you change the subject. I will take the change in subject as admission that you were wrong.
Quite the Rorschach test there. It wasn’t “mostly due to falling gasoline.” All items, minus food, shelter, and energy were +2.1% yr/yr. It’s really a shame to see what’s happened to you, Mish. The internals of that report were very positive.
It would help if you could read or think.
My statement was about M/M and it was accurate.
As for Y/Y, that was due to an easy comparison 1 year ago of +0.43
So… 0.17 – 0.43 = -0.26 Y/Y which had nothing to do with the 0.17 report for January.
You stand corrected and I expect an apology.
Oh yes, the Iron Law kicks in for you, Mike. “You can always tell a ‘progressive,’ but you can never tell a ‘progressive’ anything. They think they are better and smarter than everyone else, and like their friends the vegans, they always make sure to tell you.”
p.s.: What was the initiation like? Is there a secret handshake, or just a chip in the skull? LOL
Does ya mum pay all ya bills or are just that stupid?
Quick! Fiat money! We’re doomed! LOL
What in hell is that comment supposed to mean, guess you answered my question, ya mum does pay ya bills & ya also stupid. If you find debasement so funny ya can’t be the one paying bills.
Fiat money! We’re doomed! Gold! Wheeeee! LOL
I bet you don’t have even 1 gram of Gold or Silver which are also in a hyperbubble as is property & stocks. You can’t be taken seriously when ya like a 5 year old that end every comment with “LOL” even though you ain’t laughing & ain’t shit funny.
You can’t pay bills with gold & if you were to buy you pay a premium of up to 10%+ when you buy & 10%+ when you sell physical. Let me tell ya 90% of people have very little to zero savings so cannot buy & hold for years & pay premiums especially now when in a hyperbubble & in a few days prices can collapse 20% plus & over 80% in 6 months.
Grow up Jake the Jerk, write sensible comments or don’t write at all.
Do you realize what a cliche you are, Dagny? Nah, they never do. LOL
There are lies, there are damn lies and then there are statistics. These numbers form the economic politburo are fabricated to justify lower rates so the govt won’t go into a death spiral paying interest on their debt. Who are you going to believe, the bureau of lies numbers or your lying eyes.
Your comment reminds me of the joke about prisoners numbering their jokes and laughing when someone calls out the number. Your comment is #3. LOL
The price of gas was actually up in January, about 1%. It’s the magic of “seasonal adjustment” that declared it dropped 3%.
Yes somewhat puzzling but it will not last.
I have charts to post later.
THANKS Mish.!!! Was hoping the fuel prices wouldn’t keep climbing like they have recently. Looking forward to your post on this.