Food and gas drive prices up in January

food_prices.gi.top.jpg By Annalyn Censky, staff reporter


NEW YORK (CNNMoney) -- Prices are still going up on food and gas, but underlying inflation remains low, the government said Thursday.

The U.S. Consumer Price Index, a key measure of inflation, increased 1.6% over the past 12 months ending in January, up from 1.5% in December, the Bureau of Labor Statistics said.

Surging gasoline and food prices helped drive the number higher, accounting for two-thirds of the increase.

Over the past 12 months, the food index has risen 1.8%, its fastest pace since 2009, and gasoline prices have soared 13.4%.

"If you're the average household, and someone wants to tell you inflation is not an issue, you're probably a little skeptical," said Paul Ballew, chief economist at Nationwide.

But economists also look at core inflation, which strips out the volatile food and energy components. That number rose just 1% during the 12-month period, showing overall price pressures still remain tame.

For that reason, this report seems a bit "schizophrenic," Ballew said.

Commodities have surged over the last several months, driving up the costs for raw materials, food and energy. But amid high unemployment, businesses are still trying to avoid passing on all those costs.

"In manufacturing, in retail and financial services, you're seeing the need to restrain passing on costs to consumers," Ballew said

January's data did show big increases in clothing and airfare, which helped drive the core inflation number slightly higher.

Clothing prices increased 1% in January. While that may not sound significant, it is a large jump from December, when apparel prices rose only 0.1%.

And airline fares increased for the fifth month in a row, rising 2.2% in January alone.

"Those are two industries that are very dependent on commodities. For apparel, just look at cotton prices, and airlines are affected by fuel," Ballew said. "This is a reminder to us that commodity prices will at some time affect other categories."

On a monthly basis, the overall CPI rose 0.4% in January, unchanged from the previous month. Economists surveyed by Briefing.com had expected a 0.3% rise in January.

Core CPI rose 0.2% for the month, up from a 0.1% rate in December. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,982.59 22.02 0.13%
Nasdaq 4,444.91 -4.65 -0.10%
S&P 500 1,978.91 0.57 0.03%
Treasuries 2.49 0.02 0.89%
Data as of 10:34pm ET
Company Price Change % Change
Apple Inc 99.02 1.35 1.38%
Facebook Inc 74.92 -0.27 -0.36%
Bank of America Corp... 15.50 -0.09 -0.58%
Dollar Tree Inc 54.87 0.65 1.20%
Family Dollar Stores... 75.74 15.08 24.86%
Data as of 4:03pm ET

Sections

Herbalife shares tumble after the maker of nutritional supplements reports earnings that fall short of analysts' estimates. More

New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More

Online dating site OkCupid found its users were more likely to have conversations when it told them they were more compatible than in reality. More

Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.