Prices displayed at a New York grocery store on February 1, 2023.
Leonardo Munoz | Corbis News | Getty Images
High Inflation as Consumers Follow the US Economy in 2023 continued to see higher prices In January.
Inflation rose 0.5% for the month and 6.4% over the past 12 months, according to consumer price index data Issued by US Bureau of Labor Statistics on Tuesday. both results were greater than expectations of some economistsWhich predicted 0.4% for the month and 6.2% year-to-date.
“It’s clear the Federal Reserve has more to do to slow inflation,” said Eugenio Aleman, chief economist at Raymond James.
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The CPI measures the average change in consumer prices based on a broad basket of goods and services.
Notable increases include shelter, food, gasoline and natural gas, according to the BLS.
Categories that grew in January included motor vehicle insurance, entertainment, apparel and household goods, and operations. Other sectors that saw monthly declines in prices included used cars and trucks, medical care and airline fares.
Inflation recovery ‘will not be a straight line’
According to Aleman, after two years of inflation, the process of getting those higher prices under control will continue this year, although it will take time.
The annual inflation rate should ease by mid-year, Aleman predicts. But that downtrend could be followed by an uptrend, he said.
“It won’t be a straight line through the rest of the year,” Aleman said.
He said that consumers will get benefit due to low inflation.
“It is true that inflation is not going to return to pre-pandemic levels, but it is going to be much better than the last three years,” Aleman said.
Consumers still grappling with budget pressures
For many families trying to stretch paychecks from payday to payday, there hasn’t been much relief to date, said Greg McBride, chief financial analyst at Bankrate.com.
“What’s troubling about the prevalence of inflation is that it’s hit the hardest of the categories that are essential,” McBride said.
According to McBride, the household budget remains a major contributor to staples inflation. This includes food, shelter, electricity, natural gas, apparel, auto insurance and household goods and operations.
McBride said that last category includes paper products, which are just one example of all household purchases.
While other areas such as used car prices have come down, it doesn’t help unless you’re in the market for this type of vehicle.
This leaves many individuals and families still struggling under budget pressures.
“There aren’t a lot of places to hide from this,” McBride said.