Inflation stays stubbornly high in January

• US inflation leaped 6.4% in January, above the forecast of 6.2%.
• That means the consumer price index slightly slowed again based on year-over-year changes but remains elevated.

Inflation for the US dropped again in January based on year-over-year changes, but still starts off 2023 with high inflation.

The consumer price index (CPI) leaped 6.4% in January from a year ago in January 2022, according to unadjusted data out Tuesday from the Bureau of Labor Statistics. That means the year-over-year change surpassed the median forecast of 6.2%.

Additionally, this means CPI in January from a year earlier was just short of December's year-over-year change of 6.5%.

CPI increased 0.5% from December to January, per seasonally adjusted data. That's the same as the expected 0.5% increase. January's figure is much higher than December's change of 0.1%

Looking at just core CPI, which excludes volatile food and energy prices, this index leaped 5.6% from a year ago, compared to the forecast of 5.5%.

Looking specifically at food, prices have soared by 10.1% from a year ago based on not seasonally adjusted data. For energy, prices similarly are quite high compared to a year ago — climbing by 8.7%.

After falling in both November and December from the previous month, seasonally adjusted gas prices rose by 2.4%. Unadjusted data shows that gas prices were up 1.5% from a year prior.

Based on not seasonally adjusted data, shelter has increased 7.9% from January 2022 to January 2023. Shelter cooled very slightly based on seasonally adjusted figures over the month — a change of 0.8% in December and 0.7% in January.

Tuesday's release from the Bureau of Labor Statistics noted that "shelter was by far the largest contributor to the monthly all items increase" as it made up about half of this change. Shelter also heavily impacted core CPI. The news release from BLS stated that this accounted "for nearly 60 percent of the total increase in all items less food and energy."

Tuesday's data showed inflation continued to come down amid a strong labor market in January where a surprising 517,000 jobs were added.

"The disinflationary process, the process of getting inflation down, has begun and it's begun in the goods sector, which is about a quarter of our economy," Federal Reserve Chair Jerome Powell said at a recent event per reporting from CNBC. "But it has a long way to go. These are the very early stages."

The Fed continued to hike interest rates earlier this month in February but not as much as prior increases, increasing rates by 25 basis points.

Tuesday's report from the Bureau of Labor Statistics shows inflation is still quite high.

"Getting from 6.4% in January to the 2% target rate could take longer than what markets are hoping for," Sinem Buber, lead economist at ZipRecruiter, said.

"We need to keep our expectations realistic when it comes to the trajectory of the disinflationary process ahead of us," Buber added. "Even though the over-the-year inflation rate slowed down to 6.4% from over 9% in months, it could be a rocky road from here."