Inflation rose faster than expected in January as an increase in the cost of rent and food kept prices elevated for millions of U.S. households.
The Labor Department said Tuesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.3% in January from the previous month. Prices climbed 3.1% from the same time last year.
Both of those figures came in higher than the 0.2% monthly increase and 2.9% headline figure forecast by Refinitiv economists.
"Inflation is generally moving in the right direction… But it’s important to remember that a lower inflation rate does not mean that prices of most things are falling," said Lisa Sturtevant, Bright MLS chief economist. "Rather, it simply means that prices are rising more slowly. Consumers are still feeling the pinch of higher prices for the things they buy most often."
Here is a breakdown of where Americans are seeing prices rising and falling the fastest as they continue to wrestle with sticker shock.
INFLATION CLIMBS FASTER THAN EXPECTED IN DECEMBER AS HIGH PRICES PERSIST
Housing costs were once again the biggest driver of inflation last month. Rent costs rose 0.6% for the month and are up 6.1% from the same time last year.
Rising rents are concerning because higher housing costs most directly and acutely affect household budgets. Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home also climbed by 0.6% from the previous month.
"Overall inflation continues to grind lower, but the drop in core inflation virtually ground to a halt last month, mainly because of shelter prices," said Robert Frick, corporate economist with Navy Federal Credit Union.
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Food has been one of the most visceral reminders of red-hot inflation for Americans. In January, the cost of groceries increased for the 10th straight month.
Grocery prices climbed 0.4% over the course of the month, according to the data. On an annual basis, prices remain up 1.2% compared with the same time last year.
The cost of eggs surged 3.4% in January amid another outbreak of the avian flu. Consumers also paid more for other staples, including bread (0.3%), pork chops (0.4%), juices (1.4%), snacks (0.6%), coffee (0.6%) and fresh vegetables like potatoes (0.9%), lettuce (1.1%) and tomatoes (4.6%).
However, there were also some substantial declines in food prices last month. The cost of milk, meats like beef and veal, pork and ham and fresh fruits including apples, bananas and citrus fruits, all fell in January.
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Energy prices ticked lower in January, helping to offset some of the other price increases in the economy. Prices fell 0.9% during the month, including a 3.3% decrease in gasoline.
The average cost of a gallon of gas fell to $3.07 last month, according to AAA. Prices have risen since then, with the average cost hovering around $3.22 per gallon on Tuesday.
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"Consumers are seeing a lot of relief from inflation among price categories that change rapidly, like gasoline and used cars," said Bill Adams, chief economist for the Dallas-based Comerica Bank. "They are seeing less relief for services whose prices change slowly, and in fact, inflation in these categories continues to run fairly hot."
Electricity costs rose 1.2% in January and remain 3.8% higher than the prior year.
There was some bad news for Americans looking to buy a new car in January.
The cost of new cars inched higher last month, rising 0.2%, and remains up 0.3% year over year.
But used car and truck prices – which were a major component of the inflation spike in 2022 – tumbled 3.4% in January. Prices remain down 3.5% from the same time last year.
There's another problem for car owners: rising insurance costs. Auto insurance jumped 1.4% in January, after rising the previous two months. On an annual basis, prices are up a stunning 20.6%.
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Airline tickets continued to trend upward in January, rising 1.4% over the duration of the month.
The cost of tickets is down about 6.4% when compared with last year, according to the data.
