Inflation Rate Moderates to 6.4% in January
The U.S. Bureau of Labor Statistics reported that the consumer price index (CPI) rose 6.4% year over year in January, slightly down from 6.5 % in December. While the latest number represents a slight slowdown, the CPI was above predictions of 6.2%, signaling ongoing financial struggles for consumers.
The shelter index was the most significant contributor in January, accounting for nearly half of the month’s CPI gains. The rent index and the owners’ equivalent rent index rose 0.7% in January. The food, gasoline and natural gas indexes were also notable drivers.
“While disinflation is still underway, consumer prices rose more than expected in January as shelter costs show signs of persistence.”
- Orphe Divounguy, Zillow senior economist
A recent LendingClub report stated that 64% of consumers said they were living paycheck to paycheck in December. Furthermore, even high-income earners (making $100,000 or more) said their pay is being stretched too thin. Likewise, a U.S. News & World Report survey found that 41% of Americans stopped saving for retirement in 2022 due to climbing costs for groceries, gas, housing and other necessities. Over a quarter (32%) of respondents also withdrew some of their retirement savings to keep up with inflation. These findings further validate that sustained inflation is taking a financial toll on most Americans, and they are making trade-offs to pay their bills and make ends meet.
What’s Next?
It remains to be seen when inflation will meet experts’ predictions and fully trend downward. However, a complete inflation deceleration could still be a long process. Individuals should continue to monitor the economy and associated inflation trends, adjusting their financial habits accordingly. They can also check with their employers for financial wellness benefits and related resources.
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