"We are seeing upward momentum in prices of food and other commodities that producers can't pass along to consumers because consumers are still very fragile"
- Lindsey Piegza, an economist at FTN Financial
The Consumer Price Index (CPI) climbed 0.2% in January slightly below analyst median forecasts of a 0.3% advance, said the Department of Labor on Friday. On yearly basis CPI added 2.9%. Core consumer price index which excludes volatile energy and food costs also ascended 0.2%, matching earlier expectations.
Analysts at Goldman Sachs are predicting a notable decline in CPI over the coming year.
"[The CPI] doesn't prevent another round of quantitative easing to stimulate the economy," said Brian Kim, a currency strategist at the Royal Bank of Scotland in Stamford, Connecticut.
"Favourable base effects will drive the headline rate even lower over the next few months, assuming that the recent spike in crude oil prices doesn't get any worse, but the decline in core inflation is likely to be much more gradual," said Paul Ashworth, chief US economist at Capital Economics.
"We've seen the peak" in inflation, said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. "There is still a reasonable amount of slack in the labor market."
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