- U.S. inflation eased to 2.4% in January, according to a Friday Labor Department report
- While overall inflation was down, housing, food and health care all saw cost increases
- Core inflation rate hits lowest reading since 2021
The cost of U.S. goods and services is still on the rise, but clocked in at a slightly slower pace to start the year with annual inflation coming in at 2.4% last month, according to a Friday report from the Labor Department.
While the overall Consumer Price Index reading moved up 0.2% on a monthly basis, the 12-month reading was down from December’s 2.7% annual rate. Core inflation, which strips out volatile food and energy prices, came in at 2.5% in January, the lowest level since April 2021.
Housing-related costs accounted for most of January’s monthly increase, moving up 0.2%. The shelter index, computed by the Bureau of Labor Statistics utilizing data from new rents, existing lease agreements and a rent-equivalent calculation for owner properties, was up 3% on an annual basis in January. Shelter costs account for about one-third of the overall CPI measure.
While it has run below the national rate for much of the last two years, regional inflation for the Mountain West states, which include Utah, matched the country’s CPI last month at 2.4%.
Grocery prices moved up 0.2% from December and were 2.1% more expensive in January than the same time a year ago, while the cost of dining out saw a 4% annual rate increase last month. Energy prices slipped 1.5% on a monthly basis and were 0.1% lower in January. The cost of medical care services rose 0.3% from December to January and are 3.9% higher over the last 12 months.
“This is great news on inflation,” Heather Long, chief economist at Navy Federal Credit Union, told CNBC. “Inflation fell to the lowest level since May and key items such as food, gas and rent are cooling off. This will provide much needed relief for middle-class and moderate-income families.”
A week of positive economic vibes?
Friday’s report, which came in somewhat rosier than projected by most economists, follows a jobs report earlier in the week that also outpaced expectations.
The U.S. labor market blew past job growth expectations to kick off the new year with employers adding a robust 130,000 new positions in January, according to a Labor Department report released Wednesday.
Alongside the surprise jobs numbers — the highest monthly total in over a year — federal tracking found the average unemployment rate across the country ticked down to 4.3%, dropping 0.1% from December.
Non-farm employment growth easily surpassed the Dow Jones consensus estimate of 55,000 new jobs for the month. The biggest gains showed up in health care, social assistance and construction, according to the report, while federal government and financial services businesses saw shrinking employee rolls.
Job gains for health care, social services and construction sectors came in at 82,000, 42,000 and 33,000 respectively while the federal government saw the biggest job losses for the month at minus 34,000.
Here’s how Utahns are feeling about the economy
It’s not clear how consumers will react to this week’s upbeat economic data, but statewide polling conducted in January found Utahns in decidedly dour spirits when it comes to their collective fiscal outlook.
A Deseret News/Hinckley Institute of Politics survey, conducted Jan. 7 — 12 of 799 registered Utah voters found an overwhelming majority of respondents, some 85%, reporting they are somewhat or very concerned about the country’s economy. Just 13% told poll takers they were not at all or not too concerned about economic conditions and 2% said they weren’t sure.
Among those respondents worried about the economy, inflation emerged as the dominant issue, cited by 47% as their top concern. The cost of housing ranks second at 29% while retirement savings concerns, 11%, and job loss, 4%, lagged well behind.
When asked to think specifically about inflation, a majority of respondents pointed to the rising costs of basic necessities as the most troubling economic issue.
Groceries and other household items were the top concern for 51% of Utahns who participated in the poll, followed by housing costs, 24%, and health care, 16%. Utilities, 3%, and gasoline, 2%, ranked much lower, and 1% of respondents were most concerned about non-essential items. Only 2% indicated they were not concerned about inflation at all, highlighting how pervasive inflation-related anxiety remains, particularly around basic living expenses.