US Inflation Grows 2.1% in 2017

U.S. inflation over the full year 2017 matched the pace in 2016, which registered as the quickest in five years, according to government figures published Friday, January 12, 2018.

Digging into the details for standouts, underlying or core consumer prices jumped in December to an almost one-year high. Overall, however, price increases tapered from the previous month with the help of cheaper gasoline.

Consumer prices rose 0.1% in December — with 80% of the increase tied to higher housing costs, after surging by 0.4% in November, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from vegetables to vehicles.

"Inflation has held relatively steady since late summer even as overall economic growth roared back," MarketWatch quoted Jim Baird, chief investment officer at Plante Moran Financial Advisors.

In key categories:

  • Prices at the pump declined 2.7% last month after soaring 7.3% in the prior month. Still, gasoline prices surged 10.7% in 2017. The broader index for energy, which combines items like gasoline, electricity and fuel oil, fell 1.2% in December after rising 3.9% in November. They grew 6.9% in 2017.
  • Food prices went up 0.2% — their biggest gain since July, after flattening in both October and November. They climbed 1.6% in 2017.

Stripping the more volatile food and energy components, so-called core consumer prices advanced 0.3% in December— the largest increase since January 2017. They edged up 0.1% in November.

Within the grouping, shelter or housing costs advanced 0.4% after climbing 0.2% previously. Prices peaked in August at 0.5%, the most for a month since one in 2005. They went up 3.2% in 2017. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels, and housing at schools. The shelter component accounts for about one-third of the entire CPI.

"Along with the shelter index, the indexes for medical care, used cars and trucks, new vehicles, and motor vehicle insurance were among those that increased in December," the Labor Department’s report said. "The indexes for apparel, airline fares, and tobacco all declined over the month," it added.

U.S. inflation climbed 2.1% in 2017 — the same pace as in 2016 — after rising 2.2% in the 12 months ended November. The last two years of readings mark the quickest rates of inflation for a full calendar year since 2011.

Core inflation went up 1.8% in 2017 — the largest advance since January, and picking up from the 1.7% annual level in November. The 12-month change has now been stuck at either 1.7 or 1.8% for eight consecutive months, the government report noted. The core annual measure is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

The following table of key inflation figures is for the last seven months through December, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi). To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

June to December 2017 Consumer Prices – Gains & Losses in Percent

  Jun 2017 Jul 2017 Aug 2017 Sept 2017 Oct 2017 Nov 2017 Dec 2017 12 Month
All items .0 0.1 0.4 0.5 0.1 0.4 0.1 2.1
  Food .0 0.2 0.1 0.1 .0 .0 0.2 1.6
    Food at home -0.1 0.2 -0.2 .0 .0 -0.1 0.1 0.9
    Food away from home .0 0.2 0.3 0.3 0.1 0.2 0.2 2.5
  Energy -1.6 -0.1 2.8 6.1 -1.0 3.9 -1.2 6.9
    Energy commodities -2.7 .0 6.1 12.6 -2.3 7.1 -2.5 10.8
      Gasoline (all types) -2.8 .0 6.3 13.1 -2.4 7.3 -2.7 10.7
      Fuel oil -3.7 -2.0 2.9 8.2 2.3 5.0 3.0 15.2
    Energy services -0.5 -0.2 -0.1 -0.2 0.4 0.6 0.3 3.1
      Electricity -0.6 0.4 .0 .0 0.5 0.5 0.1 2.6
      Utility (piped) gas service -0.2 -2.3 -0.5 -0.8 0.3 0.6 1.2 4.7
  All items less food, energy 0.1 0.1 0.2 0.1 0.2 0.1 0.3 1.8
    Commodities less food, energy -0.1 -0.1 -0.1 -0.2 0.1 -0.1 0.2 -0.7
      New vehicles -0.3 -0.5 .0 -0.4 -0.2 0.3 0.6 -0.5
      Used cars and trucks -0.7 -0.5 -0.2 -0.2 0.7 1.0 1.4 -1.0
      Apparel -0.1 0.3 0.1 -0.1 -0.1 -1.3 -0.5 -1.6
      Medical care 0.7 1.0 -0.1 -0.8 .0 0.6 1.0 2.3
    Services less energy 0.2 0.2 0.4 0.2 0.3 0.2 0.3 2.6
      Shelter 0.2 0.1 0.5 0.3 0.3 0.2 0.4 3.2
      Transportation 0.2 0.2 0.4 0.3 0.2 0.1 0.3 3.7
      Medical care 0.3 0.3 0.2 0.1 0.3 -0.1 0.2 1.6

 

The BLS releases inflation data around the middle of every month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for January and the latest annual period become public on February 14, 2018.

CPI data is used in calculating inflation rates and in this site’s calculator for inflation. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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