Blame it on the eggs! But don’t forget the rent and car insurance.
The market has shown resilience. It is because of the mass amount of liquidity that has been sitting on the sidelines. Earnings and projections look stellar thus far. But until Washington sets policy, it is prudent to take money off the table if you are a position trader like me. Volatility is ruling the current market.
The January 2025 CPI Report: Inflation’s Not-So-Subtle Hints (and a Few Egg-citing Surprises)
Forget having to download an entire report—here’s the lowdown on what’s heating (and cooling) our wallets, with a healthy dash of sarcasm to keep things spicy.
Overall CPI Numbers: The Modest “Wow”
- Headline CPI: The “all items” index in January nudged up by 0.5% on a seasonally adjusted basis. Over the last 12 months, it’s climbed 3.0%. Yes, it’s growing—but only just enough to keep the Fed’s coffee-fueled worry sessions lively.
- Core CPI (All Items Less Food & Energy): If you strip out the food fights and energy drama, the core CPI ticked up 0.4% for the month and 3.3% year-over-year. Not too shabby if you’re into “steady” increments that barely break a sweat.
Food Prices: When Eggs Break the Bank
- Overall Food Category: Food prices rose a modest 0.4% this month—so far, so good. Yet over the past year, the entire food category tiptoed up by about 2.5%. Not enough to ruin your appetite…unless you’re an egg aficionado.
- Food at Home: The sub-index for food you cook at home increased 0.5% in January, and over the year, it’s up 1.9%. It looks like dinner might cost a few extra cents—but hey, gourmet ramen is still on the menu.
- Meats, poultry, fish, and eggs: Here’s where things get, shall we say, egg-straordinary. This composite category jumped 1.9% in January—but wait, the eggs index itself soared by a whopping 15.2% (the biggest jump since June 2015!). Over the year, this group is up 6.1%, with eggs skyrocketing by an astonishing 53.0%. Our feathered friends are now the VIPs of the grocery aisle, thanks in part to the avian flu that’s turning egg prices into pure gold. This won’t last forever.
- Food Away from Home: Dining out wasn’t spared either—a slight 0.2% increase this month, with a 12-month bump of 3.4%. So that artisanal burger might cost a smidge more, but you can at least enjoy the ambiance.
Energy Prices: A Mixed Bag of Hot & Cold
- Overall Energy: Energy costs in January inched up 1.1%, while over the year the index increased a modest 1.0%. Not exactly a blazing inferno, more like a lukewarm microwave dinner.
- Gasoline: Gas prices revved up by 1.8% in January. At least your car’s getting its daily dose of adrenaline.
(Side note: Other energy components had their own quirky stories—while gasoline and electricity enjoyed a little upward pressure, fuel oil took a 5.3% dive over the year.).
Shelter: Home is Where the Inflation Is
- Shelter Costs: The shelter index crept up 0.4% this month—no surprise there since housing costs are about 30% of the overall monthly hike. Over the year, shelter prices rose 4.4%, proving that even your humble abode isn’t immune to the inflation blues.
Other Notable Categories: The Finer Points of Price Pressure
Motor Vehicle Insurance, Recreation, and Used Cars & Trucks:
- Motor vehicle insurance bumped up by 2.0%—because who doesn’t love paying more to protect your car?
- Used cars and trucks inched up 2.2%, adding a little extra spice to that weekend road trip.
- Recreation costs rose 1.0%—so now your Netflix subscription might just cost you an extra latte.
Declining Areas:
- Not every category is on the up and up; apparel, personal care, and household furnishings and operations actually registered declines. Perhaps your wardrobe and that fancy coffee table are finally getting a reprieve from inflation’s relentless advance.
Summary & Implications: The Big Picture (with a Side of Snark)
The headline CPI’s 0.5% bump in January (and 3.0% year-over-year) might sound modest, but dig a little deeper, and you’ll see the drama unfolding in the food aisle—especially with those runaway egg prices. Energy is a bit of a mixed bag: while gasoline is climbing, overall annual energy increases are barely warming up. Shelter costs continue to add weight (in more ways than one) to the inflation bill.
In short, even though many categories are inching upward with barely a fuss, sectors like food—where eggs are turning into a luxury commodity—and shelter are showing sharper increases. This cocktail of modest and not-so-modest moves helps explain why policymakers (and market pundits) remain on high alert for signs of sustained price pressure.
My final take
Oh sure, if you squint hard and ignore the rest of the grocery basket drama, you might be tempted to say it’s all about those runaway egg prices and that charming 2.0% bump in motor vehicle insurance. But let’s not kid ourselves—while our feathered friends and car coverage certainly stole some headlines (with eggs surging 15.2% this month and insurance climbing like it’s auditioning for a reality show), they aren’t singlehandedly responsible for the entire 0.5% CPI uptick. Shelter, energy, and a host of other categories were busy joining the inflation party too. So, while eggs, insurance, and shelter are undeniably the diva trio of the report, it would be a stretch to truthfully claim they were behind the majority of the overall increase. The Federal Reserve would like the shelter cost to come down. (The other 2 will work their way out.) While progress has been made year over year, further progress is needed.
The market is holding up due to liquidity and good earnings, but it is fragile. The advance decline in stocks, new highs new lows, and up volume vs. down volume are showing institutions “hiding out” in big names. I would like to see this market truly broaden out. But I don’t see that happening any time soon unless we get a good correction!
Bottom line. Uncertainty and volatility will remain until Washington sets policy or we get a good correction. If you have winners, don’t ride them too long. They may not be there for long. Taking money off the table if the opportunity presents itself is prudent in this environment.
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