Here’s the inflation breakdown for January 2024 — in one chart


People shop at a home improvement store in Brooklyn on Jan. 25, 2024.

Spencer Platt | Getty Images News | Getty Images

Inflation 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.

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 more

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 January

Cartons of orange juice on display in a grocery store in Los Angeles.

Mario Tama | Getty Images

Experts react to January’s CPI report

Additionally, shelter inflation is up 6% in the last 12 months. Shelter is the largest component of the average household’s budget, and stubbornly high inflation in the category has propped up overall inflation readings.

Economists expect housing inflation to moderate due to encouraging signals, such as moderating national prices for newly signed leases, a trend that tends to take months to flow into broader inflation data.

“Everything suggests that’s going to happen,” Zandi said. “The lag is longer than I would have anticipated.”

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Other categories have retreated significantly.

Inflation for groceries, for example, has declined to 1.2% over the last 12 months, from a peak of around 13.5% in August 2022. Some categories — such as frozen noncarbonated juices and drinks, sugar, and beefsteaks — remain elevated, though. Their prices are up by 29%, 7.2% and 10.7%, respectively.

Sugar prices, for example, were affected by “ongoing shortfalls and availability issues” in 2023, said Amy Smith, an economist at Advanced Economic Solutions.

Sugar is a key ingredient in, among other things, juices and drinks; the latter were also affected by bad weather in Brazil and Florida, which reduced production of oranges and led futures on frozen concentrated orange juice to surge to an all-time high in November, Smith said. And beef production was down almost 5% in 2023, due partly to the impact of severe drought on pasture lands, she added.

Meanwhile, overall energy costs have decreased, or deflated, by 4.6% in the past year, with gasoline down 6.4%, natural gas 17.8% and fuel oil 14.2%.

Why inflation surged in the pandemic era



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