The Bureau of Labor Statistics released the January Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.49%, up from 2.29% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.26%, unchanged from the previous month and above the Fed's 2% PCE target.

Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.5 percent before seasonal adjustment.

The index for shelter accounted for the largest part of the increase in the seasonally adjusted all items index, with the indexes for food and for medical care services also rising. These increases more than offset a decrease in the gasoline index, which fell 1.6 percent in January. The energy index declined 0.7 percent, and the major energy component indexes were mixed. The index for food rose 0.2 percent in January with the indexes for both food at home and food away from home increasing over the month.

The index for all items less food and energy rose 0.2 percent in January after increasing 0.1 percent in December. Along with the indexes for shelter and medical care, the indexes for apparel, recreation, education, and airline fares all increased in January. The indexes for used cars and trucks, prescription drugs, motor vehicle insurance, and household furnishings and operations were among those to decline.

The all items index increased 2.5 percent for the 12 months ending January, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy rose 2.3 percent over the last 12 months, the same 12-month increase as reported in the previous 3 months. The food index rose 1.8 percent over the last 12 months, while the energy index increased 6.2 percent over that period. [More…]

Investing.com was looking for a 0.2% MoM change in seasonally adjusted Headline CPI and a 0.2% in Core CPI. Year-over-year forecasts were 2.4% for Headline and 2.2% for Core.

The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

(Click on image to enlarge)

The next chart shows both series since 1957, the year the government first began tracking Core Inflation.

(Click on image to enlarge)

In the wake of the Great Recession, two percent has been the Fed's target for core inflation. However, at their December 2012 FOMC meeting, the inflation ceiling was raised to 2.5% while their accommodative measures (low Fed Funds Rate and quantitative easing) were in place. They have since reverted to the two percent target in their various FOMC documents.

Federal Reserve policy, which in recent history has focused on core inflation measured by the core PCE Price Index, will see that the more familiar core CPI is now at the PCE target range of 2 percent.