BLS: CPI January 2024

January inflation report came in hotter than expected and it’s not a surprise because we know that millions of baby boomers are retiring each year depleting the labor force but not reducing consumption.

From the BLS:

CONSUMER PRICE INDEX – JANUARY 2024

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment.

The index for shelter continued to rise in January, increasing 0.6 percent and contributing over two thirds of the monthly all items increase. The food index increased 0.4 percent in January, as the food at home index increased 0.4 percent and the food away from home index rose 0.5 percent over the month. In contrast, the energy index fell 0.9 percent over the month due in large part to the decline in the gasoline index.

The index for all items less food and energy rose 0.4 percent in January. Indexes which increased in January include shelter, motor vehicle insurance, and medical care. The index for used cars and trucks and the index for apparel were among those that decreased over the month. The all items index rose 3.1 percent for the 12 months ending January, a smaller increase than the 3.4-percent increase for the 12 months ending December. The all items less food and energy index rose 3.9 percent over the last 12 months, the same increase as for the 12 months ending December. The energy index decreased 4.6 percent for the 12 months ending January, while the food index increased 2.6 percent over the last year.

How has inflation climbed since 2020?

And how is the labor force doing?

We stated this before and we state this again, we are repeating the inflationary period of the 1970s.

In the 1970s a key driver was all baby boomers hitting family formation age and increasing demand for housing, goods and services. In the 2020s we have millenials reaching family formation age and doing the same. In the 70s, OPEC embargo exacerbated inflation and today it’s millions of boomers leaving the labor force in addition to de-globalization and a global aging population.

Some people are shocked from today’s CPI report but we’re not, we fully expect inflation to surge in the coming years as more boomers continue to retire further depleting the labor force but continuing on with consumption. It won’t end well so stay tuned, stay profitable and stay solvent…