The consumer price index covering January was released today and appears to show lessening inflation. The month-over-month increase was .2% and the year-over-year was an equivalent 2.4%. Energy cost growth, other than electricity, is lessening. Food and housing costs increased in line with overall inflation, but at a slower rate than previous months. Service costs, including medical care, continue to be a driver of inflation. Transportation and education costs also were contributors to price growth. Anything government touches significantly sees the biggest price increases. So overall, inflation seems under control, with the exception of a few important areas like electricity and medical care.
On the other side of the ledger, average wages on a real basis, that is after inflation, rose .3% month-over-month and 1.9% year-over-year. That is meaningful to consumers and is the news the administration should be focusing on. Even in categories that consumers experience most directly, price rises are limited. If something could be done on health care prices that would really help. Certainly what is happening is far better than the previous administration’s woeful record on inflation. And the tariffs don’t at this point appear to be causing greater inflation, but then so many have been reduced that it is hard to tell what the long-run effect will be. (BLS Report)
