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I shared with my budgeting colleagues this week the following:
Wednesday's Consumer Price Index (CPI) report for January was as bitter as the current cold weather around here. Inflation has clearly accelerated, and the official numbers only reinforce what we are seeing and experiencing at work and home.
I took the numbers from the report and put together this table. It includes the national numbers and those for the South Region (of which NC is a part).
The "Annualized Change" column reflects the compounded rate of annual inflation based on January's 1-month change (using Excel’s “Effect” formula). As you can see, we are starting the year off at a rate that exceeds what we experienced over the past 12 months overall and in most categories.
Energy costs are driving the overall, though the "Core" reading (which does not include food and energy) is still elevated compared to the past year (and double what the Federal Reserve wants it to be at).
The monthly rate of inflation has picked up since fall, and given recent Federal policy actions and intended actions, I do not see this pace slowing down unless it is influenced by a noticeable reduction in consumer spending (not an ideal development).
The good news is that hourly earnings did keep up with inflation for January, as noted below.
Unfortunately, average weekly earnings did not do so well, an indication of shrinking hours for part-time and seasonal employees. The decline in wages shown for December is also not a great sign.
The categorizations of inflation I pulled for the first table are very broad, and more specific aspects of household spending are also tracked. You can find the specific items tracked by the Bureau of Labor Statistics here. By the way, eggs shot up 20% per dozen in January, and are now close to double their price from a year ago (thank you, avian flu).
There’s also this from Yahoo! Finance showing some considerable increases).
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