People shop at a home improvement store in Brooklyn on Jan. 25, 2024.Spencer Platt | Getty Images News | Getty ImagesInflation declined in January and consumers’ buying power rose as price pressures for U.S. goods and services continued to ease.The consumer price index, a key inflation gauge, rose 3.1% in January relative to a year earlier, the U.S. Labor Department said Tuesday. That’s down from 3.4% in December.The CPI measures how fast the prices of everything from fruits and vegetables to haircuts, concert tickets and household appliances are changing across the U.S. economy.[embedded content]While that overall downward trend is encouraging, there were a few “disappointments” under the surface, as inflation rose from December to January in categories such as shelter, food, electricity and airline fares, said Mark Zandi, chief economist at Moody’s Analytics.Ultimately, it’s likely just a “brief detour” from the broader disinflation trend, which is unlikely to move in a perfectly straight line, he added.”You get zigs and zags in all these data, and this was just a zag,” Zandi said. “The bottom line: Inflation continues to moderate. It’s still uncomfortably high — though … moving in the right direction. And all the trend lines still look good aside from today’s data detour.”Workers’ paychecks can buy moreInflation has fallen significantly from its pandemic-era peak, 9.1%, in June 2022. Around that time, the average consumer’s paycheck wasn’t keeping up with fast-rising prices. Their so-called “real earnings” — earnings after accounting for inflation — were negative for more than two years.That dynamic has reversed: Workers’ hourly pay has exceeded the rate of inflation since May. In other words, their wages can buy more. Real average hourly earnings rose by 1.4% between January 2023 and January 2024, the Labor Department said Tuesday.[embedded content]Normalizing inflation means consumers don’t need to spend down their “excess savings” to support spending, according to a recent outlook authored by J.P. Morgan’s Global Investment Strategy Group.Consumer sentiment jumped 13% in January to its highest level since July 2021, which reflects “improvements in the outlook for both inflation and personal incomes,” according to the University of Michigan.Where inflation was high in JanuaryCartons of orange juice on display in a grocery …
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[mwai_chat context=”Let’s have a discussion about this article:nnPeople shop at a home improvement store in Brooklyn on Jan. 25, 2024.Spencer Platt | Getty Images News | Getty ImagesInflation declined in January and consumers’ buying power rose as price pressures for U.S. goods and services continued to ease.The consumer price index, a key inflation gauge, rose 3.1% in January relative to a year earlier, the U.S. Labor Department said Tuesday. That’s down from 3.4% in December.The CPI measures how fast the prices of everything from fruits and vegetables to haircuts, concert tickets and household appliances are changing across the U.S. economy.[embedded content]While that overall downward trend is encouraging, there were a few “disappointments” under the surface, as inflation rose from December to January in categories such as shelter, food, electricity and airline fares, said Mark Zandi, chief economist at Moody’s Analytics.Ultimately, it’s likely just a “brief detour” from the broader disinflation trend, which is unlikely to move in a perfectly straight line, he added.”You get zigs and zags in all these data, and this was just a zag,” Zandi said. “The bottom line: Inflation continues to moderate. It’s still uncomfortably high — though … moving in the right direction. And all the trend lines still look good aside from today’s data detour.”Workers’ paychecks can buy moreInflation has fallen significantly from its pandemic-era peak, 9.1%, in June 2022. Around that time, the average consumer’s paycheck wasn’t keeping up with fast-rising prices. Their so-called “real earnings” — earnings after accounting for inflation — were negative for more than two years.That dynamic has reversed: Workers’ hourly pay has exceeded the rate of inflation since May. In other words, their wages can buy more. Real average hourly earnings rose by 1.4% between January 2023 and January 2024, the Labor Department said Tuesday.[embedded content]Normalizing inflation means consumers don’t need to spend down their “excess savings” to support spending, according to a recent outlook authored by J.P. Morgan’s Global Investment Strategy Group.Consumer sentiment jumped 13% in January to its highest level since July 2021, which reflects “improvements in the outlook for both inflation and personal incomes,” according to the University of Michigan.Where inflation was high in JanuaryCartons of orange juice on display in a grocery …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
