Consumer prices see higher-than-expected jump in January

With help from record egg prices, the Consumer Price Index (CPI) jumped 0.5% in January, the Bureau of Labor Statistics reported this week, a steeper than expected climb, and the highest month-over-month rise since August 2023.

Inflation also rose 3% annually. The increase follows a 0.4% monthly rise and 2.9% annual rate in CPI reported for December.

Food inflation hit 0.4% in January, with food at home rising 0.5% thanks to a bump from four of the six grocery indexes. Egg prices drove two-thirds of that food at home increase, as the bird flu outbreak continues to send prices skyrocketing. Meat, poultry, fish, and eggs rose 1.9%, with eggs up 15.2% from the previous month, a major uptick from the 3.2% increase seen in the month prior and the largest jump since June 2015. Over the past year, egg prices have risen a whopping 53%.

Those egg prices haven’t cooled in February, either—their wholesale price is currently $7.68 a dozen in the US, representing an over 25% monthly increase. They’re so high that Waffle House has added $0.50 per egg surcharge. Eggs have also been getting more difficult to come by, leading retailers like Trader Joe’s, Costco, Kroger, and Whole Foods to impose purchasing limits in certain locations.

For those looking for other breakfast options, breakfast cereals dropped 3.3% in January, helping the cereals and bakery products index decline by 0.4%. CPI also dropped for fruits and vegetables (0.5%). The index rose for dairy and related products (0.3%), nonalcoholic beverages (0.9%), alcoholic beverages (0.3%), and other food at home (0.3%).

In other retail categories: The index for apparel declined 1.4%, while personal care products rose 0.4%.

Zoom out: Despite continued inflationary prices reported in January’s CPI, “consumer behavior is unwavering,” Kelsey Robinson, senior partner at McKinsey, told Retail Brew via email.

“People are continuing to splurge on high-value goods and experiences, while economizing where they can by cutting back on those lower-value items,” she said. “This means that consumers will be prioritizing what is important to them right now, and spending there. Given most consumers’ wallets are still fuller than normal, when they really want to spend, they will.”