Consumer Price Index: Jump in Gas Prices Pushes Overall CPI up 0.3 Percent in January

February 10, 2021

(This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.)

The overall inflation picture looks good. Inflation in the problem areas (rent, medical care, and education) continues to be under control. We will see a bounce back in hard hit sectors like airfares and hotels. 

Higher oil prices will lead to further rises in gas prices, which will show up in the overall CPI. However this should be limited, especially if we start to see dividends from investments in clean technology.

  • A jump in gas prices pushes the overall CPI up 0.3 percent in January; the core index is flat.
  • Overall and core CPI are both up 1.4 percent year-over-year.
  • Rent and owners’ equivalent rent are both up just 0.1 percent in January; year-over-year they are up 1.6 percent and 2.0 percent, respectively.
  • Rental inflation has slowed sharply, especially in high-priced metro areas. In NYC, the annual rate just 0.7 percent over the last six months. In Seattle, it’s 1.1 percent, and San Francisco it’s 1.1 percent. There has been no offsetting acceleration in low-priced areas. If rental inflation remains low, it will seriously dampen overall inflation. (Note, those numbers were for owners’ equivalent rent.)
  • The medical care index is up 0.4 percent in January driven by a 1.6 percent jump in the index for physician services. The medical index is still up just 1.9 percent year-over-year.
  • The education index is flat in January, up 1.3 percent year-over-year.
  • Store-bought food prices fell by 0.1 percent in January, while restaurant prices are up 0.3 percent. Over last year, restaurant prices are up 3.9 percent, compared to 3.7 percent for store-bought food. This is the normal pattern which had been reversed in the pandemic.
  • New and used vehicle prices fell 0.5 and 0.9 percent, respectively. Over the last year, they are up 1.4 percent and 10.0 percent.
  • Car insurance prices are up 1.6 percent. They have fluctuated widely in the pandemic due to a drop in driving and accidents. They are still down 3.7 percent year-over-year.
  • Hotel prices are down 2.2 percent in January, 13.3 percent year-over-year. Airfares are down 3.2 percent in January, 21.3 percent year-over-year.

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