According to a February 10th release by the Department of Labor the January inflation rate as measured by the Consumer Price Index exceeded projections of a 0.4 percent rise in January to attain a 7.5 percent annualized value. The rise represents a four-decade high and confirms what all consumers have accepted as a practical reality. Given the trajectory of the rise coincident with a tight labor market and disruptions in the supply chain and based on experience, a rapid reversal is unlikely. This is despite optimistic comments from some economists and those in the Administration during December and January.

Food and energy prices were both up 1.0 percent in January with a rise of 7.5 percent in food over 12 months. The January inflation in the protein category comprising meat, poultry, fish and eggs was 12.2 percent compared to the corresponding month in 2021. Enigmatically food-away from home at 6.4 percent exceeded the food-at home value of 7.4 percent comparing January 2022 with the same month in 2021.

James Bullard of the St. Louis Federal Reserve Bank issued a hawkish statement in the early afternoon recommending a full one percent increase in the interest rate over three Fed. meetings by late June to tame inflation. The realization that the Federal Reserve will in all probability act aggressively to raise by 50 basis points in March caused markets to retreat with the DOW down 1.5 percent, the S&P down 1.8 percent and the NADAQ down 2.1 percent.