CPI inflation report: BLS releases January inflation rate of 6.4%, how have the Dow Jones and stock market responded?
The monthly inflation data gives the clearest insight into how price changes are affecting consumers in the United States.
The first inflation data for 2023 was released on Tuesday morning as the Bureau of Labor Statistics (BLS) published the consumer price index (CPI) report for January. The report found that inflation was running at an annualised rate of 6.4%, and a 0.5% increase on typical prices one month earlier.
The BLS report confirmed that prices “rose 0.5 percent in January on a seasonally adjusted basis, after increasing 0.1 percent in December”. This suggests that the inflationary pressures still pose a considerable threat to the economy and could prompt the Federal Reserve into implementing more interest rate hikes to address the trend.
Every month the agency releases the inflation figures for the previous month, outlining how typical prices changed. Figures are calculated using a ‘basket’ of goods and services and the estimated value is compared to the same month in the previous year.
After rampant inflation throughout much of 2022 the White House will be hoping that price rises cool off this year. However an astonishingly strong jobs report for January suggest that the economy is still running hot.
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Experts predicted Dow Jones volatility ahead of January inflation report
After battling against inflation for much of 2022 the monthly CPI report has become a key bell-weather of economic confidence. Last year the markets typically had their most volatile days when the inflation figures were released.
In a bid to curb price rises the Federal Reserve has met inflation with a series of interest rate hikes to cool the economy. These efforts do appear to have brought down inflation but have also placed a strangle hold on the economy and worried markets.
On Monday the Dow Jones closed 376 points higher to end the session with its best day this month. Likewise the S&P 500 and Nasdaq Composite all closed up. It seems like the markets are still expecting inflation to remain high and are adjusting accordingly.
“The market is starting to sense that the very comforting disinflation story is more complex than we’d like it to be,” Mohamed El-Erian, chief economic advisor at Allianz, told CNBC’s ‘Squawk Box’ on Monday.
What was the inflation rate for December?
Last month the BLS reported that inflation in the United States had continued the trend of gradual decline, falling to an annualised rate of 6.5%. That followed a figure of 7.1% in November and represented a considerable fall on the peak of 9.1% recorded in June.
That decrease was due in large part to the falling price of gasoline across the country. Motor fuel plays a large role in household finances for drivers so price changes can have a significant impact on inflation.
“I don’t think people will be talking about inflation this time next year,” claimed Mark Zandi, chief economist at Moody’s Analytics, speaking last month. “It just won’t be at the top of their agenda when thinking about their own finances.”
What time are the monthly inflation reports be published?
Each month the CPI is published with data related to the previous month’s economic activity. The January 2023 inflation report was released at 8:30am (ET) on Tuesday, 14 February. We’ll have the lowdown on the data right here as soon as the report is published.