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Headline consumer prices were flat in January, against expectations for a 0.1 per cent month-over-month (mum).Core CPI i.e. consumer prices ex-food and energy were up 0.3 per cent, above expectations of a 0.2 per cent mum rise.
The energy index fell 1.7 per cent in January and the food index was unchanged, after rising 0.2 per cent every month for the last three months. From the BLS press release:
“Increases in the indexes for shelter and apparel accounted for much of the increase in the index for all items less food and energy, with advances in the indexes for recreation, medical care, and airline fares also contributing.
“The index for all items less food and energy increased 1.9 per cent for the 12 months ending January. Airline fare (3.8 per cent), medical care (3.1 per cent), shelter (2.2 per cent), and apparel (2.1 per cent) were among the indexes that rose more quickly.”
Investors watch this number because it is a monthly indicator of inflation and gives us insight into the cost of living. The Fed’s preferred measure of inflation however is the personal consumption price index because it reflects what consumers are purchasing, according to Bloomberg.