Each month, the Bureau of Labor Statistics, a part of the U.S. Labor Department, issues measures on the level of inflation occurring across the U.S. economy. Established in 1884, the bureau was originally a part of the Department of the Interior. The bureau is headed by a commissioner who serves a four-year term after being confirmed by the U.S. Senate.
Late last week, the bureau released various Consumer Price Index figures for January. The overall measure reported an increase in seasonally adjusted CPI of 0.1 percent for January. Looking back over the past 12 months, the CPI increased only 1.6 percent.
Within the aggregate Consumer Price Index measures, a number of components of inflation are tracked and reported. In January, price components such as personal care, medical care and recreation increased. One of the more significant increases was reported for the shelter portion of the index, with an increase of 0.3 percent.
Some of the index components showed very modest overall price declines in January. Used cars and trucks, apparel and airline fares all showed minor price declines, as measured by the Bureau.
The results of these measures of historic U.S. inflation are often referenced with certain exclusions. Various portions of the overall inflation index can be more volatile in their measurements. For example, food and energy measures are sometimes excluded. Although, over the past 12 months, the CPI measure with and without the price changes in the food and energy sectors remained consistent at the overall measure of 1.6 percent.
Price inflation, as measured by the CPI, is important not only for the effect on personal spending, but also because of the inflation indication provided to the U.S. Federal Reserve. The Federal Reserve’s Open Market Committee, now chaired by Janet Yellen, has the primary responsibility for setting short-term interest rates and thus managing U.S. inflation.
Kirby Brown is the CEO of Beneficial Financial Group based in Salt Lake City.