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Inflation ticked up in January, while consumer spending surged
Meanwhile, consumers continued to feel better in January.
Inflation’s cooldown was halted in January, as the Fed’s preferred gauge shows that prices across the economy ticked up slightly to start the year.
The U.S. Bureau of Economic Analysis released the following data for January 2023 on personal consumption expenditures:
Consumer spending increased 1.8% in January, showing a boost to begin the year. It was driven by an increase in compensation, as personal income rose 0.6%. This underscores how a strong labor market is continuing to drive consumer spending.
Inflation rose at a more marked pace of 0.6% for the month, showing an uptick on a monthly basis after several more modest increases. On an annual basis, inflation also ticked back up to rise 5.4% when compared to January 2022. That was a slight increase from 5.3% in December, which came after months of decline. It’s a sign that inflation is remaining stubborn, even as it has come down from its summer highs.
Core inflation, which leaves out the volatile food and energy measures, followed the same trend as overall inflation. It increased 0.6% month-over-month, which was even with overall inflation. On an annual basis, core inflation was 4.7%, also ticking up slightly from December’s 4.6%.
The takeaway: While inflation has come down, it remains high and is not yet in the rearview mirror. The increase in consumer spending shows demand remains strong, even as the Federal Reserve raises interest rates to attempt to cool the economy and bring inflation under control. A hot job market remains a tricky part of that equation for policymakers, but will likely continue to keep people spending, especially as wages continue to grow.
Consumers are continuing to feel a bit better. Sentiment rose 3% on a monthly basis in February according to the University of Michigan’s final reading for the month.
It’s the third straight monthly increase, bringing consumer sentiment out of the all-time lows it saw in June 2022. In particular, there was a 12% increase in consumers’ short-term outlook on the economy. Still, sentiment remains below historical averages.
When it comes to inflation, expectations ticked up slightly to a rate of 4.1%. That’s higher than 3.9% in December, but below 4.4% in November. Given the slight uptick in actual data for January, it seems expectations are mirroring the inflation rate itself.
“Consumers continued to exhibit considerable uncertainty over short-run inflation, and thus their expectations may be unstable in the months to come,” wrote University of Michigan Survey of Consumers Director Joanne Hsu.
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Kellogg's takes inspiration from employees, Latin in snacks rebrand
Kellanova is now the parent of Pringles, Cheez-Its and Pop Tarts.
Kellogg Company's snacks business is now Kellanova. Here are a few finer points about how the forthcoming parent of Cheez-Its and and Pop-Tarts arrived at the new name.
Last year, Kellogg announced plans to split its business into multiple companies.
Now, one company will have North American cereals like Frosted Flakes, Froot Loops and Rice Krispies under the WK Kellogg Co banner.
Another will have snacks like Pringles, North American frozen foods such as Eggo and plant-based brands like MorningStar Farms.
This week, Kellogg announced that the snacks business has a new name: Kellanova.
Here are the strategies that Kellogg employed that led to this name:
- Ask the employees: Kellogg Company asked employees for input on the name, and received 4,000 suggestions from 1,000 employees.
- Listen to the results: 20% of the employees suggested a variation of the W.K. Kellogg name, while other employees suggested that the name include "nova."
- Go to the root: "Nova" comes from the Latin word for new. CEO Steve Cahillane said it "signals our ambition to continuously evolve as an innovative, next generation, global snacking powerhouse."
As The Wall Street Journal reports, this is just the latest new company name to take a Latin root in recent years, as Kellanova joins GE Vernova, Mondelez and Altria. It's also among a number of spinouts being completed by corporations, joining GSK spinoff Haleon, J&J's Kenvue and a forthcoming company that will spin out of 3M.
Even with a name that emphasizes moving forward, Kellanova is keeping one element that is familiar: The logo still has the iconic cursive K. It will even get the boldly simple stock ticker symbol "K" to go along with it.
Even the WK Kellogg Co is combining the past and future. The company is seeking to position itself as a "117-year-old startup," even as it draws on the name and signature of the Kellogg's founder. There's even a more subtle hint about an unwritten chapter: The "Co" doesn't have a period.
To get to the future, you need to bring along a bit of the past.