10 months ago • 2 mins
Data out on Tuesday showed US consumer prices rose more than expected last month.
What does this mean?
The Federal Reserve must be getting, ahem, fed up: the central bank’s pulled out all the stops to try and get rid of inflation, upping rates eight times since last March. But like that one annoying guest who lingers when the party’s over, inflation didn’t take the hint last month – a slap in the face for the eager economists who’d already claimed victory. Sure, medical care, airline fares, and used car prices dropped, but that was overshadowed by hefty upticks in energy and shelter costs. All in all, US consumer prices rose more than economists were expecting: 0.5% for the month – the most in three months – and 6.4% versus January last year. There is one caveat, though: the Bureau of Labor Statistics tinkered with the way it calculates that headline number, meaning an apples-to-apples comparison with past data is pretty tricky.
Why should I care?
The bigger picture: Service with a frown.
Tuesday’s figures make one thing crystal clear: the drop-off in the inflation of goods – which has been key to slowing price increases lately – has hit a wall. That means any serious further dip in inflation will probably have to be driven by services. And that’s a tall order: see, Americans have shifted spending to services recently, pushing prices upward – and with January's red-hot jobs report suggesting wages could keep rising, services inflation might prove hard to squash.
Zooming out: Love hurts.
Love is in the air this week – it's just a shame that the price of romance has got airborne too. Hard-pressed valentines faced a 17% steeper bill for their candlelit dinners this year, while data from the National Retail Federation predicted Valentine's Day spending would jump to $26 billion this year, up from $24 billion last time around.
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