The monthly consumer price index increased by the highest rate since August 2023, according to the report.
“Combined with a solid labor market, it will likely keep the Fed on hold for the foreseeable future. Policymakers are also awaiting further clarity on Trump’s policies, particularly tariffs, which are already causing consumer inflation expectations to rise,” Bloomberg reported.
Five things to know:
1. The all items index was up 3% year over year in January, with the index for energy up 1% and food up 2.5%, according to the Bureau of Labor and Statistics. The index for shelter increased 4.4%, transportation jumped 8% and medical care service was up 2.7%.
2. The index for prescription drugs jumped 2.5%, a record monthly increase, and hospital services rose 0.9% during the month. Physicians services’ index increased only slightly, 0.1%, in January.
3. Labor costs, including salaries and benefits, are a large portion of health system expenses and have risen sharply over the last few years. Real hourly earnings–a report combining year over year inflation with wage data–reflected a 1% growth in hourly earnings overall.
4. Hospitals had seen a stark increase in spending leading into 2025. The Kaufman Hall “National Hospital Flash Report” showed total expenses up 6% last year and 17% over 2021. Labor expenses per calendar day jumped 5% year over year while supply and drug expenses each rose 9%. Purchased services expenses per calendar day were up 8% year over year and 22% over the last three years.
5. Bloomberg’s economics experts said January’s inflation results are partially due to the “January effect” – as there are typically steep core CPI increases to start the year. February’s numbers will help financial leaders more accurately judge current trends, according to the report. Hospital leaders keep a close eye on the inflation rate to negotiate payer contracts that will support the changing economy through the duration of the contract.
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