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The new official U.S. report on consumer inflation in January was so bad that I don’t even have to resort to my usual tack of focusing on the baseline effect to make this case. Not that I won’t mention it at all: It still strengthens the argument that precious little progress has been made in easing the nation’s cost of living crisis.

But the monthly numbers – which spotlight the very latest inflation trends – make all too clear on their own that prices are on the upswing again. And in an especially interesting twist, so does a set of special revisions incorporated into these data.

The new results show that the headline Consumer Price Index (CPI) rose by 0.52 percent sequentially in January. That’s the hottest such figure since last June’s blazing 1.32 percent. Moreover, the increase from December’s 0.13 percent was the biggest monthly jump in absolute terms since last May.

The revisions moreover, demonstrate that inflation has amassed even more momentum than previous thought. Half of the twelve monthly figures were upgraded, including those for the last five. Indeed, December’s widely hailed 0.08 dip from November’s level is now pegged as the 0.13 percent increase mentioned above.

Very similar monthly developments mark the so-called core CPI data, which strip out energy and food prices supposedly because they’re volatile for reasons basically unrelated to the economy’s underlying prone-ness to inflation.

These prices increased by 0.41 percent on month in January – the worst such reading since September’s 0.57 percent and the second consecutive increase. The revisions picture was a litte better than for headline CPI, with the results for only four months getting upgrades, six getting downgrades, and two months staying unrevised. But three of those upward revisions were for the last three months.

The annual figures, of course, are where we see the baseline effect most clearly – how these results stack up against the previous year’s numbers. If that latter figure – the baseline figure – was unusually low, a strong price increase during the following year could well indicate simply that inflation was returning to a long-run normal rate. As I saw it (e.g. here), that was the case early during the recent surge in CPI (and other official inflation measures); hence my belief that it was mainly transitory (as Federal Reserve Chair Jerome Powell famously said during that period).

But if the baseline is relatively high, heated inflation the following-year could well indicate that price rises will be longer lasting – in particular because it could signal that businesses believe they have pricing power. And as I see it, that’s where we’ve stood with inflation more recently – including this morning’s findings.

So it’s true that annual January headline CPI of 6.35 percent was the lowest since October, 2021’s 6.24 percent, and cooler than December’s 6.44 percent. But the baseline for December was a blazing 7.10 percent, and for January, a blazing-er 7.59 percent. Further, the October, 2021 baseline was just 1.17 percent between the previous October’s – an abnormally low rate (and much less than the Fed’s target of two percent) that surely supported the argument for a transitory return to normal to that point in 021. The last two readings reveal prices jumping on top of already troubling increases.

To add insult to injury, revisions pushed the annual headline CPI results for the previous four months

January’s core consumer inflation rate of 5.55 percent was the lowest since December, 2021’s 5.52 percent and better than last December’s 5.70 percent. But the baseline for that latest CPI number was 6.09 percent. For December, 2022 it was that aforementioned 5.52 percent. So the gap between the baseline change was much bigger than the most recent annual improvement. As for the baseline for December, 2021? It was just 1.63 percent – again, below the Fed target.

And the November and December annual core CPI rises have both been revised up, too.

These discouraging inflation results should surprise exactly no one with any knowledge of how the economy works. Economic growth is apparently continuing. Unemployment is low. Wages are falling in inflation-adjusted terms, but massive past stimulus from Washington and continued sky high federal outlays keep filling whatever gaps are emerging in consumers’ personal finances. And as long as Americans act like they’ve got plenty of money to spend, businesses will keep jacking up prices.

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