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Core U.S. inflation rate accelerates to normal
02/17/2011 10:40 am EST
First, the Consumer Price Index (CPI) came in above expectations with a 0.4% increase in January. Economists had expected a 0.3% increase, according to Briefing.com. That puts the headline inflation rate at an annual 1.6%, according to the Bureau of Labor Statistics.
The core inflation rate rose by a monthly 0.2%. That was above the 0.1% projected by economists. The annual core inflation rate is currently 1.0%
The increase in the headline CPI of 0.4% matched the 0.4% rate for December. The core rate moved up from 0.1% in December.
Put that together with yesterday’s slightly higher than expected—0.8% versus 0.7%--monthly increase in prices at the wholesale level and inflation does indeed look to be moving higher.
Second, that increase in the inflation rate brings the current very slow recovery more into line with the average economic recovery. A 0.2% monthly growth rate in the core inflation rate is the typical monthly increase during an economic expansion. The January numbers represent another sign that the economy is returning to normal patterns after the Great Recession.
It’s worth pointing out too that the 0.4% month increase—actually two monthly 0.4% increases in a row—is a result of higher energy (2.1% increase for the month) and food (0.7% increase for the month) costs. The United States clearly isn’t exempt from the big increases in energy and food costs that are driving inflation rates around the world.
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