U.S. Inflation Advances 2.3% In 2019 For Quickest Rate Since 2011

United States inflation in 2019 accelerated the most for a year since 2011 despite a modest increase in December, a government report showed Tuesday, Jan. 14.

On an annual basis and for the first time since April, both food and energy prices increased. Year-over-year costs for energy had declined in May to November.

U.S. consumer prices increased 0.2% in December after rising 0.3% 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 tomatoes to transportation.

In key pricing categories:

  • Prices at the pump advanced 2.8% in December on top of the 1.1% increase in November. Gasoline prices increased 7.9% in 2019 after sliding 2.1% in 2018. The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 1.4% last month after rising 0.8% previously. Energy prices moved up 3.4% in 2019 after slipping 0.3% in 2018.

  • Overall prices for food rose 0.2% from 0.1%. Food prices increased 1.8% in 2019 following their pick-up of 1.6% in 2018.

Excluding the more volatile food and energy components, so-called core consumer prices edged up 0.1% in December following their previous 0.2% increase.

Shelter or housing costs rose 0.2% after rising 0.3% in November, while they increased 3.2% for all of 2019 to match 2018. 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 advanced 2.3% in 2019 from 2.1% in the 12 months ending November. The annual inflation rate was the largest for a calendar year since 2011 and the highest year-on-year level since October 2018. In contrast, February’s 12-month mark of 1.5% was the lowest since September 2016. Inflation rose 1.9% in 2018.

Core inflation also rose 2.3% in 2019, matching 12-month increases in the periods ending October and November. For some recent comparisons, the annual core inflation rate at 2.4% in the periods ending August and September registered the highest since July 2018 while the 2% marks in March and May were the lowest since February 2018. Core inflation climbed 2.2% in 2018.

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.

"Inflation remains extremely well contained," The Wall Street Journal quoted Michelle Girard, chief U.S. economist at NatWest Markets. "If we continue to see benign inflation, or even more worrisome, if inflation cools from here in 2020, that could be a trigger for rate cuts."

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. 14, 2020. 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 2019 Consumer Prices – Gains & Losses in Percent

  June 2019 July 2019 Aug 2019 Sept 2019 Oct 2019 Nov 2019 Dec 2019 12 Month
All items 0.1 0.3 0.1 .0 0.4 0.3 0.2 2.3
  Food .0 .0 .0 0.1 0.2 0.1 0.2 1.8
    Food at home -0.2 -0.1 -0.2 .0 0.3 0.1 0.1 0.7
    Food away from home 0.3 0.2 0.2 0.3 0.2 0.2 0.3 3.1
  Energy -2.3 1.3 -1.9 -1.4 2.7 0.8 1.4 3.4
    Energy commodities -3.5 2.4 -3.3 -2.3 3.5 1.1 2.8 7.4
      Gasoline (all types) -3.6 2.5 -3.5 -2.4 3.7 1.1 2.8 7.9
      Fuel oil -2.3 0.6 -0.9 -0.8 0.8 1.4 1.6 4.6
    Energy services -0.7 .0 -0.2 -0.1 1.8 0.4 -0.3 -1.2
      Electricity -0.8 0.6 -0.3 .0 1.6 0.3 -0.5 -0.4
      Utility (piped) gas service -0.3 -1.8 0.1 -0.7 2.4 1.1 0.3 -3.5
  All items less food, energy 0.3 0.3 0.3 0.1 0.2 0.2 0.1 2.3
    Commodities less food, energy 0.4 0.2 0.2 -0.3 -0.1 .0 .0 0.1
      New vehicles 0.1 -0.2 -0.1 -0.1 -0.2 -0.1 0.1 0.1
      Used cars and trucks 1.6 0.9 1.1 -1.6 1.3 0.6 -0.8 -0.7
      Apparel 1.1 0.4 0.2 -0.4 -1.8 0.1 0.4 -1.2
      Medical care -0.2 0.2 0.3 -0.6 1.2 0.1 1.5 2.5
    Services less energy 0.3 0.3 0.3 0.3 0.2 0.3 0.2 3.0
      Shelter 0.3 0.3 0.2 0.3 0.1 0.3 0.2 3.2
      Transportation .0 0.3 0.4 0.3 0.1 .0 -0.3 0.6
      Medical care 0.4 0.5 0.9 0.4 0.9 0.4 0.4 5.1

 

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 February 13, 2020.

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.

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