Consumer Price Index (CPI) for January 2007 - Higher than Expected

U.S. Department of Labor announced today (February 21st) The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January, before seasonal adjustment. Click here to view the Bureau of Labor Statistics Report. The January level of 202.416 (1982-84=100) was 2.1 percent higher than in January 2006.

Analysts and Fed Watchers were forecasting an Increase in CPI of 0.1% and a Core CPI increase 0.2%.  Actual reports were 0.1% higher than expected.  Primary items leading the increase were Food & Beverage and Medical Costs.

The next release of CPI data for February 2007 will be on March 16th, on the heels of the Federal Reserve's FOMC, rate-setting, meeting on March 20-21.

Today's report would seem to indicate that the potential for the Fed to reduce the Fed Funds Rate from the current level of 5.25% is diminished to near zero.  Unless February's CPI numbers show a significant increase (signs of inflation) the Fed will likely leave the rate "unchanged."