Both headline and core CPI saw one-tenth-greater-than-expected prints for January, up 0.3% and 0.4% month-over-month. The year-over-year gains were two-tenths above the estimates at up 3.1% and 3.9% respectively, versus 3.4% and 3.9% in the month prior. The data is a reminder that while inflation is decelerating in its rate of change, hitting a target of 2% is not a snap of the finger, explains Peter Boockvar, editor of The Boock Report.

Energy prices were lower by 0.9% MOM and 4.6% YOY, partly offset by a 0.4% MOM and 2.6% YOY rise in food prices. Eating out of home remains expensive with full-service meal prices up 0.4% MOM and 4.3% YOY, while quick-service prices are higher by 0.6% MOM and 5.8% YOY.

Services prices ex-energy jumped by 0.7% MOM and 5.4% YOY. Rent of Primary Residence saw prices up 0.4% MOM and 6.1% YOY while Owners’ Equivalent Rent was higher by 0.6% MOM and 6.2% YOY. Both are well above current reality, but they were well below when rental prices were spiking over the past few years.

Medical care costs are now really jumping, in part because of the more realistic health insurance calculations (up 1.4% MOM and have been rising 1%+ each month since late last year). They rose 0.5% MOM versus 0.4% in December and 0.5% in November.

Price gains for auto insurance are out of control, spiking by another 1.4% in January alone after a 1.7% increase in the month before. They’re up 20.6% YOY. Fixing your car is pricey, too, rising 0.8% MOM and 6.5% YOY.

Travel got expensive again as hotel prices jumped 2.4% in January after a one-tenth rise last month. They are up a more modest 0.6% YOY. Airline fares were higher by 1.4% MOM, though down 6.4% YOY.

On the core goods side, prices fell 0.3% MOM, continuing the disinflation seen in this category. They are lower by 0.3% YOY. Used car/truck prices fell a sharp 3.4% in the month and are lower by 3.5% YOY. New car prices were unchanged vs. December and up 0.7% YOY.

Apparel prices fell 0.7% MOM and are flat YOY. Prices related to the home fell one-tenth MOM and by 1.3% YOY. With the pace of existing home transactions at the lowest level in almost 30 years, there is obviously going to be less demand for carpet, paint, furniture, flooring, etc.

While we'll see continued moderation in rental inflation, medical care costs are now accelerating (which is the biggest weight in PCE), particularly in health insurance. Wages are still running well above the pre-Covid pace, the cost of insurance for everything is rising off the charts, and eating at a restaurant continues to get more expensive.

On the goods side, we're back to the pre-Covid pace of basically zero. But with rising transportation costs and the possibility of a turn toward inventory restocking, maybe they curl up again. Lastly, oil is quietly at $77 again and the average gallon of gasoline is at the highest level since early December.

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