The U.S. Bureau of Labor Statistics reported the consumer price index increased 0.5% in January, an accelerated pace over the (+0.1%) and (+0.2%) posted for the prior two months. Over the last 12 months, the all-items index is up (+6.4%) before seasonal adjustment as compared to (+6.5%) in December. This marks the seventh straight month of a cooling in the annual inflation rate since it peaked at 9.1% in June. The index for shelter was the largest contributor to the monthly all items increase, accounting for nearly half of the 0.5% monthly reading and 60% of the 6.4% annual inflation rate. The shelter index increased (+0.7%) in January. The indexes for food (+0.5%), gasoline (+2.4%), and natural gas (+6.7%) also contributed. The indexes for transportation (+0.9%), apparel (+0.8%), electricity (+0.5%), and new vehicles (+0.2%) all saw increases. Indexes for user cars and trucks (-1.9%) and medical services (-0.7%) both saw decreases. Core CPI inflation rose (+0.4%) in January, equaling the upwardly revised (+0.4%) for the previous month. The annual rate of core CPI inflation is now at 5.6%, down slightly from 5.7% in December. The shelter index is up 7.9% year over year and accounts for nearly half of the total increase in Core CPI.

The Commerce Department reported advance U.S. retail and food services sales surged 3.0% to $697.0B in January, a reversal from the (-1.1%) and (-0.6%) readings for the prior two months. January’s advance was the largest since March 2021 when a third round of stimulus checks were released. Retail sales which are adjusted for seasonal shifts but not inflation were up 6.4% year over year Total sales for the November 2022 through January 2023 period were up 6.1% year over year. Sales increased in virtually all categories with department stores (+17.5%), restaurants (+6.9%), and auto dealers (+5.9%) leading the way. In addition, home furnishings (+4.4%), electronics and appliance stores (+3.5%), miscellaneous retail (+2.8%), clothing (+2.5%), health and personal care (+1.9%), and internet retailers (+1.3%) all saw increases. Sales at gasoline stations were flat. Excluding autos and gasoline, sales were up (+2.6%) for the month. Excluding autos, sales increased (+2.3%). Core retail sales, a measurement that excludes spending on autos, gasoline, building materials, and food services increased (+1.7%) in January.

The Labor Department reported that the Producer Price Index for final demand increased by a seasonally adjusted 0.7% in January, this follows revised (-0.2%) and (+0.3%) reported for the prior two months. The PPI is seen as a bellwether for inflation as it measures what suppliers are charging businesses. The PPI index continued to decelerate to an annualized (+6.0%) in January, this follows (+6.5%), (+7.3%), and (+8,2%) reported for the prior three months. The high-water mark was set in March 2022 at (+11.7%). Final demand prices for goods advanced 1.2%, the most in seven months, significantly contributing to the headline number. Nearly one-third of that increase was attributable to a (+6.2%) increase in the price of gasoline. The final demand index for food fell (-1.0%), as the cost of eggs (-12.7%) and fresh and dry vegetables (-33.5%) both dropped significantly. Year over year food prices moderated to an annualized (+11.6%). Final demand prices for services increased (+0.4%) matching December. A major factor behind the rise in prices for services was the index for hospital outpatient care, which jumped (+1.4%). Excluding food, energy, and trade services, the so-called core PPI increased (+0.6%) in January, the largest monthly rise since March 2022. The core PPI continued to decelerate to an annualized (+4.5%) in January, this follows (+4.7%), (+4.9%), and (+5.5%) reported for the prior three months. The high-water mark was set in March 2022 at (+7.1%).