Key Points:
CPI inflation was 3.0% year-over-year in January.
- On a quarterly annualized basis, core inflation – which excludes volatile food and energy components – has generally accelerated from the relatively low levels seen last summer.
- Rising headline inflation has obscured more positive news across two housing-related components: primary residence rent and owner’s equivalent rent.
- These two components account for roughly 1/3rd of the CPI by weight so continued disinflation across these components is supportive of the Federal Reserve’s broader inflation goal.
CPI Inflation Trends, 3M/3M SAAR
Despite elevated inflation, real wage growth appears solid across the wage distribution.
- Overall, CPI-adjusted wage growth measured by the Atlanta Fed’s wage tracker is 1.7% - comparable to the 1.8% average rate across 2019.
- Real wage growth is an important determinant of households’ ability to consume and economic growth generally.
Atlanta Fed Wage Growth Tracker, CPI Inflation-Adjusted
