United States inflation ticked higher in December but for 2020 it still ran at its slowest pace for a calendar year since 2015, according to a government report released Wednesday, Jan. 13. The monthly level was driven up largely by higher gas prices.
As for the year overall, energy prices fell sharply, including those for gasoline and fuel oil, while the cost of food increased significantly.
U.S. consumer prices climbed 0.4% in December after rising 0.2% in November, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from eggs to energy.
"The seasonally adjusted increase in the all items index was driven by an 8.4-percent increase in the gasoline index, which accounted for more than 60 percent of the overall increase," the Labor Department’s monthly report noted.
In key pricing areas:
Compared to the 8.4% gain for gasoline in December, prices at the pump declined 0.4% in November and they fell 0.5% in October. Before then, they were higher for four consecutive months. Gasoline prices declined 15.2% in 2020 following their 7.9% increase in 2019.
The broader index for energy, which combines items like gasoline, electricity and fuel oil, picked up 4% in December from their modest 0.4% increase in November. Energy prices fell 7% in 2020 after moving 3.4% higher in 2019.
Overall food prices rose 0.4% for the month after slipping 0.1% in November for their first decline since July. Food prices advanced 3.9% in 2020, up from 1.8% in 2019.
Excluding the more volatile food and energy components, so-called core consumer prices inched up 0.1% in December after gaining 0.2% in November.
"The indexes for apparel, motor vehicle insurance, new vehicles, personal care, and household furnishings and operations all rose in December. The indexes for used cars and trucks, recreation, and medical care were among those to decline over the month," the monthly report said
Shelter or housing costs edged 0.1% higher for a fifth month in a row. They gained 1.8% in 2020 after advancing 3.2% in years 2018 and 2019. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.
In the headline annual figure, U.S. inflation rose 1.4% in 2020 — compared to 1.2% previously, marking the smallest yearly rate since logging in at 0.7% in 2015. They advanced 2.3% in 2019. In May, the rate at 0.1% was the smallest 12-month gain since September 2015. In contrast, they started 2020 at 2.5%, for the largest annual inflation rate of the year.
Core inflation increased 1.6% in 2020, matching gains in the 12-month periods ending October and November, and after climbing 2.3% in 2019. Earlier in 2020 (both in May and in June), the core rate at 1.2% was the lowest since March 2011. February at 2.4% registered as the largest annual core inflation rate this year. The core, "all items less food and energy" index 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) on Jan. 13, 2021. 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 2020 to December 2020 Consumer Prices – Gains & Losses in Percent
|June 2020||July 2020||August 2020||September 2020||October 2020||November 2020||December 2020||12 Month|
|Food at home||0.7||-1.1||-0.1||-0.4||0.1||-0.3||0.4||3.9|
|Food away from home||0.5||0.5||0.3||0.6||0.3||0.1||0.4||3.9|
|Gasoline (all types)||12.3||5.6||2.0||0.1||-0.5||-0.4||8.4||-15.2|
|Utility (piped) gas service||.0||-1.0||-0.2||4.2||-0.7||3.1||-0.8||4.1|
|All items less food, energy||0.2||0.6||0.4||0.2||.0||0.2||0.1||1.6|
|Commodities less food, energy||0.2||0.7||1.0||0.8||-0.2||0.1||0.2||1.7|
|Used cars and trucks||-1.2||2.3||5.4||6.7||-0.1||-1.3||-1.2||10.0|
|Services less energy||0.3||0.6||0.2||.0||0.1||0.2||0.1||1.6|
The BLS tends to release inflation data around the middle of a 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 Feb. 10, 2021.
CPI data is used in calculating inflation rates and in this site’s U.S. Inflation Calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.