The Consumer Price Index (CPI) increased 0.5% on a seasonally adjusted basis in January, after rising 0.4% in December. Last week’s U.S. Bureau of Labor Statistics report highlights a 0.4% increase for shelter as the variable that accounted for nearly 30% of the monthly increase. The last time we saw a 5% or greater monthly increase was August 2023. Increases this substantial typically do not occur in a vacuum. A look at this chart shows that an increase of this magnitude is often followed by another 5% or greater increase.

“We are now in riskiest period for inflation policy since the early Biden Administration. Even without tariffs, immigration restrictions, deficit bloat and attacks on the Fed there would be serious grounds for inflation worry,” said Lawrence Summers, economist and 71st Secretary of the Treasury from 1999 to 2001.