According to a report from the Bureau of Labor Statistics, the Consumer Price Index increased by 6.4% between January 2022 and January 2023 as a result of continued high price pressure on household essentials including food and shelter.

Despite a 2.0% increase in energy prices, prices for food and shelter rose by 0.5% and 0.7%, respectively. Analyst predictions were exceeded by the monthly growth of 0.5% and the 0.4% increase in core inflation, which excludes the more volatile food and energy categories.

In comments provided to The Daily Wire, Bankrate Chief Financial Analyst Greg McBride said:

“The pace of disinflation has slowed, and if a 0.5% monthly increase in headline and 0.4% in core prices are what passes for progress, we have low expectations.”

One week after Joe Biden stated that “inflation is coming down” in his second State of the Union address the most recent price level report was released. Biden claimed that inflation had become a global issue because of the pandemic and Putin’s war.

“Inflation has been a global problem because of the pandemic that disrupted supply chains and Putin’s war that disrupted energy and food supplies, but we’re better positioned than any country on Earth,” Biden said.

In January 2023, year-over-year inflation was 6.4%, a slight moderation from the 6.5% recorded in December 2022. A large portion of the disinflation was caused by energy prices, which had dropped 4.5% in the previous month. This trend currently seems to be reversing itself, as prices for gasoline and utility gas services jumped 2.4% and 6.7%, respectively, in January 2023. Last year, after gasoline prices attained their highest levels on record, elevated fuel costs occurred.

For households attempting to make ends meet, the increase in food prices has been especially salient. Between January 2022 and January 2023, the price of food consumed at home climbed by 11.3%, while over the same period, the price of food consumed away from home increased by 8.2%.

“The broad-based improvement needed to be seen in order to feel good about where inflation is headed is still lacking. The leading contributors continue to be categories that are staples of the household budget: food, shelter, electricity, natural gas, apparel, vehicle insurance, and household furnishing and operations,” McBride continued.

Gallup found that 50% of respondents indicated they are “financially worse off” than they were a year ago, while 35% said they are “financially better off.” These are the poll’s most depressing findings since the financial crisis of 2008 and 2009. The majority of households with lower incomes reported being in a poorer position financially. As inflation has indeed eroded household purchasing power and led some consumers to fund their budgets with savings and debt.

McBride added thatInflation has shredded household budgets over the past two years, and not just when it comes to one-off discretionary expenses or special occasions, but for keeping up with day-to-day bills. Until inflation returns to the 2% neighborhood, pressure on household finances will continue.”

To combat inflationary pressures, Federal Reserve policymakers have been raising the target federal funds rate. After implementing four consecutive rate increases of 0.75% and one rate increase of 0.5% in the second part of last year, officials increased rates by 0.25% earlier this month.

Despite the fact that further information on inflation and unemployment is anticipated before authorities make their decision, McBride said central bankers are still anticipated to raise interest rates by 0.25% during their meeting next month.

Watch the video below for more details:

Sources: Dailywire, Gallup, Whitehouse.gov, Bls.gov

 

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