WASHINGTON — Consumers paid more in January for everything from food and gas to airline tickets and clothing. The price increases reflect creeping but still-modest inflation.
The Consumer Price Index rose 0.4 percent last month, matching December’s increase, the Labor Department said Thursday. In the past year, the index has risen 1.6 percent.
Core prices, which exclude volatile food and energy costs, rose 0.2 percent. That’s the largest increase in more than a year. They increased 1 percent over the past 12 months. That’s higher than December’s 0.8 percent annual pace, but well below the Federal Reserve’s preferred range of closer to 2 percent.
Food prices climbed 0.5 percent in January, the most in more than two years. However, food costs in the U.S. are relatively tame compared with many developing countries, which are more vulnerable to steep rises in the prices of corn, wheat, coffee and other major commodities.
Also on Thursday, a private research group’s gauge of future economic activity rose a slim 0.1 percent in January, much less than in recent months. The rise in the Conference Board’s index of leading economic indicators was the seventh consecutive monthly advance.
The report on consumer prices shows that some companies are seeking to pass on higher prices for oil, cotton, and agricultural products. In January, a measure of wholesale inflation rose at the fastest pace in more than two years.
But high unemployment and weak wage increases are limiting retailers from hiking up prices.
“With the unemployment rate still at 9 percent, there will be plenty of downward pressure on underlying prices and so we don’t expect core inflation to trend upwards,” Paul Ashworth, an economist at Capital Economics, said.
Still, many food companies are raising prices in response to a jump in the cost of raw materials. Corn prices have doubled in the past six months. Prices for wheat and soybeans have also risen sharply.
Bad weather has damaged harvests in Russia, Australia, Argentina, and elsewhere. At the same time, rapid growth in developing countries is raising demand for a range of commodities, pushing up prices.
Global food prices have risen 29 percent in the past year, according to a World Bank report Tuesday. They are just 3 percent below the all-time peak reached in 2008.
Higher food prices are pushing overall inflation up in developing countries and contributing to political unrest. China said Tuesday that consumer prices rose 4.9 percent in January, driven by a 10.3 percent jump in food costs. Rising food prices led to five days of riots in Algeria last month that left three people dead.
The impact has been much smaller in the United States. Americans spend a much smaller proportion of their budgets on food — about 14 percent, compared to 40 percent to 50 percent overseas.
And commodity costs make up a smaller portion of food prices. Transportation, processing and packaging account for a much larger chunk, said Kurt Karl, chief U.S. economist at Swiss Re. That means big swings in grain costs have less of an impact at U.S. grocery stores.
In developing countries, people are more likely to buy raw commodities and prepare basic foods such as bread at home, Karl said. And as people in poorer countries spend more on food, they are more likely to push for higher wages to cover those costs. That leads companies to raise prices further, pushing inflation higher in a vicious cycle.
Central banks in some countries, including China and Brazil, are taking steps to thwart inflation, such as increasing interest rates. That could slow their economic growth and cut into U.S. exports.
Federal Reserve officials unanimously concluded late last month that inflation is not yet a problem in the U.S., according to minutes from their January meeting. The central bank anticipates inflation won’t exceed 1.7 percent this year.
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