Some Prices Are Up, but Is That Inflation?

The headline Consumer Price Index jumped up at an annualized rate of 4.9 percent in January, following a 5.3 percent increase in December. The 12-month growth rate is now 1.6 percent. Energy, commodity, and food prices have been exerting significant upward price pressure lately—increases in those items were responsible for roughly two-thirds of the measure’s overall increase in January, according to the BLS. Food prices spiked in January (the food at home index jumped up 9.3 percent—its largest increase since July 2008—as all six major food groupings posting increases). The price of motor fuel has risen at an annualized rate of 54 percent over the past three months. But are these recent price increases simply relative price movements brought about by changes in supply and demand conditions, or are the increases symptomatic of a monetary impulse working its way through prices in general?