Consumer Price Inflation Remains Moderate

By Tom Burnett, CFA

On February 13, 2020, the Bureau of Labor Statistics released consumer price inflation data for the month of January. Overall CPI inflation was up 0.1% from the prior month and 2.5% on a year-over-year basis. The Core rate, excluding food and energy, rose 0.2% for the month, and 2.3% for the year. The Core rate on a year-over-year basis has been 2.3% for five straight months. It does not appear that inflation forces are set to break out and rise to the 3.0% level that would motivate the Federal Reserve to begin raising interest rates.

The Fed’s preferred inflation gauge is the Personal Consumption Expenditure measure which only rose 1.6% for the 12 months ended December 2019. Based on the current relevant data, inflation does not appear to have risen to levels where restrictive Federal Reserve action is necessary.

Tom Burnett CFA is Director of Research