Inflation continues to accelerate, and at a much faster pace than anticipated. Headline inflation rose a much stronger than expected +1% MoM (consensus +.4%), and to a 25+ year high (1981) of 7.4% YoY (consensus +7.3%, prior +6.3%). Food and energy price gains were much stronger than expected. Food prices rose +1.7% MoM (+8.3% YoY) and energy rose +1.5% MoM (+22.6% YoY). Gasoline rose an even stronger +2.9% MoM and 48.1% YoY. Core PPI, which excludes food and energy, rose +.4% MoM (consensus +.2%) and +2.3% YoY (consensus +2.2%, prior +2%). The monthly increase in core inflation was the largest in almost a year.
There was a broad-based rise in core consumer goods (+1.1% MoM) and capital equipment (+.4% MoM) in January. Drug costs rose +1.5% MoM, the largest monthly gain in a year and a half. Computers, cars, and women's apparel are the only major categories showing annual price declines.
Crude food prices, which covers grains such as corn and wheat, that have been hitting new record highs this year, rose +2.7% MoM in January. Producer prices for all crude goods, the earliest level in the chain of production, rose +2.5% MoM (+31.3% YoY), while intermediate goods prices rose +1.4% MoM (+8.8% YoY). Excluding food and energy, crude goods have risen +4% MoM and +21% YoY, while intermediate core PPI prices have risen +.8% MoM and +4.1% YoY. It is clear that pipeline pressures are re-emerging.
This was the last of the major inflation indicators for January. CPI and import prices also showed strong gains, with the annual increase in import prices hitting an all-time record high of 13.78% YoY. Higher commodity prices are clearly feeding into final prices, as are rising labor wages in Asia.
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