Consumer Prices Rise Slightly in January

The Consumer Price Index increased 0.2 percent in January, the Labor Department announced Friday. This is the second time in four months that consumer prices have risen. The slight increase was driven by higher costs for gas, clothes, food and rent. Economists downplayed the price increases, saying that inflation is likely to ease in the coming months as prices for raw materials level off, the Associated Press reports.

The gauge of future economic activity rose in January for the fourth consecutive month.

The indexes for food, energy, and all items less food and energy each increased 0.2 percent in January.  Within the food group, the food away from home index increased 0.4 percent, its largest increase since August. The food at home index was unchanged, while prices for the major grocery store food groups were mixed. Consumers paid more for dairy and related products (0.9 percent). they also paid more for meats, poultry, fish, and eggs. Fruits and vegetables, though, dropped 1.3 percent, the fourth consecutive decline. The indexes for cereals and bakery products also decreased.

The energy index’s increase comes after three previous months of declines. Gasoline rose 0.9 percent. Over the last 12 months, the gasoline index has risen 9.7 percent.

Excluding food and energy, the so-called core prices edged up 0.2 percent. Clothing prices increase 0.9 percent in January, while recreation rose 0.6 percent. tobacco prices and medical care also increased.

Over the past year ending in January, prices rose 2.9 percent, down slightly from December’s year-over-year change of 3 percent. The core prices moved up 2.3 percent, the largest 12-month increase in more than three years.

 Inflation is a sign that the economy is growing. A modest rise in prices, coupled with a rise in income, gives consumers more buying power.

 In another report released Friday, the Conference Board Leading Economic Index for the United States increased 0.4 percent in January following a 0.5 percent increase in December and a 0.3 percent increase in November.

The Index is comprised of 10 components, including average weekly initial claims for unemployment benefits, stock prices, building permits, new orders, and the average consumer expectations for business and economic conditions. Ken Goldstein, economist at The Conference Board, said in a statement, “Recent data reflect an economy that started the year on a positive note.  The LEI suggests these conditions will continue and could possibly even pick up this spring and summer.”