U.S. Consumer Prices Increase by 0.5% in January, Driven by Rising Shelter Costs

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in January, after a 0.1 percent increase in December, according to the U.S. Bureau of Labor Statistics. The increase was driven by the index for shelter, which contributed to almost half of the all items increase. The indexes for food, gasoline, and natural gas also played a role.

The food index rose by 0.5 percent, with the food at home index increasing by 0.4 percent. The energy index increased by 2.0 percent over the month, as all major energy component indexes rose. The index for all items less food and energy increased by 0.4 percent, with categories such as shelter, motor vehicle insurance, recreation, apparel, and household furnishings and operations seeing increases. However, the indexes for used cars and trucks, medical care, and airline fares decreased.

Over the last 12 months, the all items index increased by 6.4 percent before seasonal adjustment, the smallest increase since October 2021. The all items less food and energy index rose by 5.6 percent, its smallest 12-month increase since December 2021. The energy index increased by 8.7 percent for the 12 months ending January, while the food index increased by 10.1 percent over the last year.

The rising prices are a concern for policymakers, as inflation can erode the purchasing power of consumers and businesses. The Federal Reserve has indicated that it is closely monitoring inflation and has signaled that it may continue raising interest rates to rein in prices if necessary. The recent data is likely to increase pressure on the Fed to take more action to curb inflation.

Percent changes in CPI January 2023
Adjusted and un-adjusted Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city average

Overall Market Performance Following the CPI

The much-anticipated Consumer Price Index (CPI) data has just been released, offering crucial insights into the state of consumer prices in the United States. With concerns over inflation still elevated, the release of the CPI data has taken on added significance, as investors look for any signs of direction in the face of a changing economic landscape.

On the given day, the Dow Jones Industrial Average (DJIA) closed at 34,089.27, which represents a decrease of 156.66 points or 0.46% from the previous day’s close. The S&P 500 index fell 0.03% and closed at 4,136.13.

However, the Nasdaq Composite index performed better than the other two indices, as it closed 0.57% higher at 11,960.15. This increase in the Nasdaq Composite was boosted by the strong performance of technology stocks, including Tesla and Nvidia, which rose 7.51% and 5.43%, respectively.

It’s worth noting that the DJIA and S&P 500 are both comprised of a wider range of industries and sectors, while the Nasdaq Composite is heavily weighted towards technology companies. Therefore, the performance of the Nasdaq Composite on this particular day was largely driven by the strong performance of tech stocks.



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