Wikinvest Wire

Consumer prices rise modestly

Friday, February 19, 2010

[Major news outlets are reporting that core inflation has fallen for the first time since 1982, however, there appears to be a problem with the re-weighting of categories within the consumer price index - more on that later.]

The Labor Department reported that consumer prices rose 0.2 percent in January, paced by a surge of 4.9 percent in the cost of energy commodities, and, as the worst of the year-over-year energy price comparisons continue, annual inflation now sits at 2.6 percent.
IMAGE Core inflation - excluding food and energy - was reported to have declined by 0.1 percent in January, the first monthly decline since 1982, and this was due in large part to a decline of 0.5 percent in the shelter component that contributes about 40 percent to the total.

By category, the report showed the same well established trend of recent months - steadily rising prices for medical care and education with huge year-over-year increases for the energy components within both the housing and transportation categories.
IMAGE Gasoline prices surged 4.4 percent in January after a gain of 2.3 percent in December and fuel oil costs rose 6.9 percent after an increase of 0.9 percent the month prior.

In the case of housing, energy price gains such as home heating costs were offset by falling shelter costs that reportedly tumbled 0.5 percent in January leading to the overall monthly decline for the housing category as a whole.

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Anonymous said...

With newspapers reporting Wellpoint-Anthem raising insurance premiums by 25% to 40%, the health care numbers they use are a joke. Someone impartial should calculate the CPI. Someone who understands how much things actually cost in the real world.

All the BLS seems to know how to calculate is imaginary numbers that don't exist in the real world, such as the rent homeowners don't actually pay to themselves.

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