January '25 Inflation highest in a year

[ua_guy]

Well this isn't good news for consumers. Hoping it comes down. And this is without widespread tariffs. Eggs have risen over 15%, fuel is up over 6%, used cars, and meat, have all risen in price.

https://www.cbsnews.com/news/cpi-report-january-inflation-what-it-means-for-your-money/

[disneysteve]

Eggs are at least in large part due to bird flu. The tariffs are going to skyrocket prices because that's how tariffs work. They also will have negative environmental impact. Coke has already announced that they will shift to producing and selling more plastic bottles instead of aluminum cans due to the aluminum tariff. I'm sure other companies will do the same to avoid the higher cost of materials since most of our aluminum comes from Canada.

Surprisingly, the stock market hasn't really reacted yet in any meaningful way.

[Fishindude77]

Here we go, I'll get some popcorn.

[disneysteve]

Here we go, I'll get some popcorn.

Or you can scroll by if you aren't interested in the topic.

If political comments get made, I'll delete them when I see them. Until then, it is absolutely an appropriate topic for a finance forum.

[kork13]

Surprisingly, the stock market hasn't really reacted yet in any meaningful way.

I think this is the more interesting point for me. Is the market just becoming accustomed to chaos, or all of the "bad news capacity" is already used up & there's just nowhere for it to go without becoming undervalued? I don't think either are actually the case, but I agree that the one-two punch of tariffs + less favorable economic data should typically have driven a downward trend, even if only temporarily. Some other strongly optimistic factor must be insulating the market from negative news ... My only guess is hopes for reduced regulation & a more favorable tax regime .... But shouldn't those forces have driven the market up ahead of the bad news, if it's so-meaningfully balancing recent negative influences?

I dunno. This is why I try to avoid market timing & active trading styles -- I can't read the tea leaves & make sense of it all, and generally skeptical of anyone who claims otherwise.

[Fishindude77]

Apologize for first sarcastic remark. Here is some thought on the issue(s).

I don't put much stock in statistics posted by a news media outlet, because we all know they are generally pushing their own particular agenda.
We have definitely seen some serious inflation over the last 3-4 years. Nearly all of our daily consumables; gas, groceries, utilities, etc. increased significantly over that period. The inflation is largely related to the feds spending / printing money they don't have which devalues our purchasing power. I certainly haven't noticed any sharp increases in just the last month ....for example gas is about the same price.

We're only about a month into the new administration, so let's not jump to conclusions regarding what new plans and policies are going to do. The threats of tariffs are largely a bargaining tool and we've yet to see how much of this is going to come to reality. Hopefully it just motivates our trading neighbors to step in line and do some of the things many Americans desire. The stock market seems to like the new administrations "pro US business" approach so we aren't seeing anything crazy going on with the market.

Regarding environmental issues, I don't think there is any question that US manufacturers and producers do things in a much cleaner, more environmentally safe manner -vs- competitors around the world, so on-shoring business -vs- buying all of our products from cheap overseas producers is likely better for the environment.

Another very popular thing regarding the new administration is doing is picking apart federal agencies, budgets, etc. to root out waste and fraud. I don't know too many Americans that wouldn't agree that the federal government and all of its agencies are horribly bloated, way too costly, and waste $$ like crazy. Hopefully they will have some success at seriously reducing the size and cost of the federal government. Time will tell, but I'm more optimistic than I've been in a while regarding these issues.

[QuarterMillionMan]

Tarifs could actually bring inflation down. By implementing reciprocal tariffs some countries might lower their tariffs where we are paying higher tariffs than they pay us. This strategy could reduce inflation and not increase inflation so I'm not sure why people are panicked about the sky is falling.

[ua_guy]

I think this is the more interesting point for me. Is the market just becoming accustomed to chaos, or all of the "bad news capacity" is already used up & there's just nowhere for it to go without becoming undervalued? I don't think either are actually the case, but I agree that the one-two punch of tariffs + less favorable economic data should typically have driven a downward trend, even if only temporarily. Some other strongly optimistic factor must be insulating the market from negative news ... My only guess is hopes for reduced regulation & a more favorable tax regime .... But shouldn't those forces have driven the market up ahead of the bad news, if it's so-meaningfully balancing recent negative influences?

I dunno. This is why I try to avoid market timing & active trading styles -- I can't read the tea leaves & make sense of it all, and generally skeptical of anyone who claims otherwise.

Stocks did tumble on the inflation data but they regained most of it yesterday. I think the overall trend resembles what you said about chaos. Markets have endured this brand of chaos before, and while inflation increased per month end January (not just news, actual economic data), there's still a solid economy underneath it. Threats of tariffs and other measures are noise in the background until they actually start meaningfully impacting prices.

Egg prices continue to skyrocket, although, from a personal standpoint, egg prices don't register as a concern. My concern there is less is being done to curtail the Bird Flu pandemic, and now report data about it is now being suppressed at the request of the government. I'm not optimistic here...there's been human death from bird flu and it's also been found in cows, so it has potential to affect livestock supply, or possibly become another widespread pandemic. Being kept in the dark isn't helping.

The steel/aluminum tariffs and reciprocal tariffs will most certainly pommel the markets once the pricing impact reaches consumers.

[Petunia 100]

Well this isn't good news for consumers. Hoping it comes down. And this is without widespread tariffs. Eggs have risen over 15%, fuel is up over 6%, used cars, and meat, have all risen in price.

https://www.cbsnews.com/news/cpi-rep...or-your-money/

One way we are attempting to cope with rising prices is to consume less meat. This is hardly a new idea, but it is effective.

[ua_guy]

Tarifs could actually bring inflation down. By implementing reciprocal tariffs some countries might lower their tariffs where we are paying higher tariffs than they pay us. This strategy could reduce inflation and not increase inflation so I'm not sure why people are panicked about the sky is falling.

Negative. Sky isn't falling. Prices are rising. It's fine to downplay it, but inflation has been identified as one of the most important issues, if not *the* most important issue affecting the economy, and we were promised the new economic policy(ies) would begin lowering inflation on day one.

[Petunia 100]

Tarifs could actually bring inflation down. By implementing reciprocal tariffs some countries might lower their tariffs where we are paying higher tariffs than they pay us. This strategy could reduce inflation and not increase inflation so I'm not sure why people are panicked about the sky is falling.

I'm not really expecting tariffs to make consumer goods more affordable.

[myrdale]

Its funny that egg prices and inflation weren't of any concern a year ago for some, suddenly are.

[disneysteve]

The threats of tariffs are largely a bargaining tool and we've yet to see how much of this is going to come to reality.

That's true, though it also causes chaos in the process. Businesses across the country and the world are having to make contingency plans regarding how they will continue to function if the threatened tariffs happen. Businesses can't turn on a dime so they can't wait until something happens to start preparing for it. They need to act now to secure new sources of raw materials, new sales markets, new distribution systems, new places to recruit employees (related to immigration changes, not tariffs), etc. Whether the tariffs happen or not, they have devastating effects on business here and abroad. Also, if the point of tariffs is at least in part to bring business back to the US, imposing tariffs on things that don't exist here won't magically make that happen. The US won't suddenly start cranking out tons of aluminum to replace what isn't coming in from Canada, for example.

Regarding environmental issues, I don't think there is any question that US manufacturers and producers do things in a much cleaner, more environmentally safe manner -vs- competitors around the world, so on-shoring business -vs- buying all of our products from cheap overseas producers is likely better for the environment.

And why do US manufacturers produce things more cleanly? REGULATIONS which is a big target of the new administration which wants to reduce or eliminate as many of them as possible.

"Regulations, basically, should be default gone," the head of the White House's Department of Government Efficiency (Elon Musk) said on the call, "Not default there, default gone."

Another very popular thing regarding the new administration is doing is picking apart federal agencies, budgets, etc. to root out waste and fraud.

I agree with reducing waste. What I don't agree with is simply walking in and shuttering entire Federal agencies in the name of doing so. The old adage of throwing the baby out with the bathwater certainly applies here. Take a targeted and methodical approach. Study the organization for a while and seek out redundancies. Find ways to maintain efficiency with a reduced workforce. Combine physical locations and sell off superfluous properties. Increase the number of workers allowed to work remotely so that you can reduce the costs of maintaining office space that isn't really needed.

[disneysteve]

Its funny that egg prices and inflation weren't of any concern a year ago for some, suddenly are.

I don't think that's true at all. Inflation was top of the news for quite a while and egg prices were too during the last bout of bird flu.

[disneysteve]

Stocks did tumble on the inflation data but they regained most of it yesterday.

I don't really consider a one-day drop of a few hundred points to be a "tumble" if it comes back the next day. That's just normal volatility. When I said that the market hasn't really reacted, I mean in any sustained way.