January Inflation: What’s Up, What’s Down in the US Marketplace

By Andrew Moran
Andrew Moran
Andrew Moran
Andrew Moran covers business, economics, and finance. He has been a writer and reporter for more than a decade in Toronto, with bylines on Liberty Nation, Digital Journal, and Career Addict. He is also the author of "The War on Cash."
February 10, 2022 Updated: February 10, 2022

The U.S. annual inflation rate surged to its highest level since 1982 in January, new Bureau of Labor Statistics (BLS) data show.

Last month, the consumer price index (CPI) climbed 7.5 percent, topping the market estimate of 7.3 percent. The core inflation rate, which eliminates the volatile energy and food sectors, advanced 6.0 percent, slightly higher than economists’ forecasts of 5.9 percent.

On a monthly basis, inflation jumped at a higher-than-expected rate of 0.6 percent in January.

The four-decade high inflation affected hourly and weekly earnings.

The U.S. government reported Thursday that real average hourly earnings tumbled 1.7 percent year-over-year. The BLS also noted that real average hourly earnings merged with a drop in the average workweek led to a 3.1 percent decline in real average weekly earnings.

So, what cost more and what cost less in January?

Feasting on Higher Prices

The food index increased 7 percent to kick off 2022, with nearly every food item rising, except for frozen noncarbonated juices and drinks, which slid 0.2 percent.

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Produce is shown in a grocery store in Toronto on Friday, Nov. 30, 2018. (Nathan Denette/The Canadian Press)

Bread prices rose 5.9 percent, beef and veal jumped 16 percent, pork swelled 14.1 percent, ham increased 10 percent, and chicken surged 10.3 percent.

Fish and seafood added 9.6 percent, while eggs and milk picked up 13.1 percent and 6.8 percent, respectively.

Fruits and vegetables rose 5.6 percent. Within this category, there was a 10.2 percent spike in oranges and a 6.8 percent rise in the price of apples. Lettuce soared 6.2 percent, but potatoes edged up just 0.1 percent, despite the spud shortages worldwide.

What about a cup of java? Coffee prices soared 8.6 percent, with roasted coffee climbing 9.3 percent and instant advancing 6 percent.

Other food items: margarine rose 9.2 percent, baby food increased 7.8 percent, rice surged 3.6 percent, and salad dressing tacked on 7.8 percent.

Filling up the Gas Tank

The energy index advanced 27 percent year-over-year, with oil and gas prices buoyed by tight market conditions, the geopolitical tensions at the Ukraine–Russia border, and tough winter weather.

Fuel oil climbed 46.5 percent, gasoline surged 40 percent, and electricity added 10.7 percent. Utility gas service soared 23.9 percent, while propane and kerosene prices were up 22.6 percent.

But it also cost more to purchase an automobile last month. The price of new vehicles advanced 12.2 percent, while used cars and trucks skyrocketed 40.5 percent. Transportation services also revved up 5.6 percent.

Car and truck rentals soared 29.3 percent, public transportation increased 4 percent, and parking fees edged up 2.7 percent. Airline fares picked up 4.9 percent, while ship fares shed 2.1 percent.

It was a more challenging time for American renters to keep a roof over their heads as shelter recorded a big bump to welcome 2022, rising 4.4 percent. However, tenants’ and household insurance tumbled 1.7 percent.

Everything Else in the US Marketplace

Overall, shoppers spent more on nearly everything in the marketplace. Window coverings climbed sharply 16.2 percent, bedroom furniture surged 13.7 percent, men’s apparel added 6.6 percent, watches rose 6.5 percent, and clocks and lamps picked up 6.3 percent.

The list of items that eased in January was small: girls’ apparel (-4.3 percent), men’s pants (-0.8 percent), recreational books (-1.2 percent), computer software (-2 percent), and smartphones (-13.3 percent).

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A waiter carries food at The Farmhouse restaurant in Newport Beach, Calif., on Sept. 9, 2020. (John Fredricks/The Epoch Times)

Higher prices are having an impact on household budgets. A recent International Council of Shopping Centers (ICSC) survey found 57 percent say inflation is causing financial hardship for their households, while 64 percent note that cost pressures are affecting their savings.

The same poll highlighted that 42 percent are reducing daily spending, 40 percent are cutting back on leisure and entertainment activities, and 32 percent are transitioning to cheaper generic brands.

While this is negatively affecting U.S. shoppers, small businesses are also feeling the pain of rising prices, says the National Federation of Independent Business (NFIB).

The NFIB Small Business Optimism Index fell 97.1 in January, with close to one-quarter (22 percent) of owners reporting inflation as their biggest problem.

Moreover, the net percent of owners increasing average selling prices rose to a net 61 percent, the highest figure since the fourth quarter of 1974.

“More small business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies, and labor costs,” said NFIB Chief Economist Bill Dunkelberg. “In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.”

The Federal Reserve and the Treasury Department forecast that inflation would remain hot for much of 2022, potentially easing in the second half of the year. But consumers do not believe it as the Fed Bank of New York’s monthly Survey of Consumer Expectations revealed that Americans think inflation will remain elevated at around 6 percent by the end of the year.

Will the U.S. central bank raising interest rates be enough to curb inflation?

“If rising the rates doesn’t bring inflation down, it could cause recession. Therefore, the Fed’s got to find the right balance, to be patient and to tighten gradually,” said Ipek Ozkardeskaya, a Senior Analyst at Swissquote, in a note.

Andrew Moran
Andrew Moran covers business, economics, and finance. He has been a writer and reporter for more than a decade in Toronto, with bylines on Liberty Nation, Digital Journal, and Career Addict. He is also the author of "The War on Cash."