Inflation Falls 0.7% in January

Still more deflation in the U.S. The latest CPI report showed that consumer prices fell 0.7% in January. Of course much of that is due to the collapse in oil prices. The “core” CPI, which excludes food and energy, rose 0.2%.

Thanks to the lower prices, the real or inflation-adjusted increase in wages was very good. We got the average hourly earnings report a few weeks ago, but now we see that the “real” increase was 1.2% for January. In other words, American workers got their biggest raise in years.

There was also a big jump in initial jobless claims this morning. Jobless claims rose 31,000 to 313,000. That’s huge but I’ll warn you that this series can bounce around a lot. Just a few weeks ago, we had some of our lowest reports in decades. So before anyone worries about weakness in the job market, I want to see if this trend is confirmed by more data.

Posted by on February 26th, 2015 at 9:49 am

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