Consumer prices declined for the first time in more than 2-1/2 years in December, while annual inflation dropped below 7% for the first time in over a year and for a sixth straight easing, according to a U.S. government report released Thursday, Jan. 12.
Lower energy prices for the month offset continually higher food and shelter costs, although the price of energy remained stubbornly high compared to a year ago.
In the headline monthly figure, U.S. consumer prices declined 0.1% in December, after rising 0.1% 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 electricity. The monthly decline, on a seasonally adjusted basis, was the first since May 2020.
Food prices again climbed, but at a slower rate, up 0.3% for the month from 0.5%. Within the category, grocery prices rose 0.2% against 0.5% previously, while the cost of eating out increased 0.4% from 0.5%.
Year-over-year, food inflation remained high pacing at 10.4% compared to 10.6% previously. Over the same time, grocery prices rose 11.8% from 12%. Meanwhile, prices for foods consumed outside of the home increased 8.3% through the year from 8.5%.
In better news, prices at the pump declined for a second straight month, falling 9.4% in December after declining 2% in November. Their year-on-year level fell 1.5% against the robust prior increase of 10.1%. Last year’s high-water mark happened in the 12 months ending June when gasoline inflation at 59.9% was the highest since March 1980.
The broader index for energy, which combines items like gasoline, electricity, and fuel oil, fell 4.5% for the month after sliding 1.6%. Energy costs rose 7.3% from a year earlier, slowing from the previous 13.1% annual rise.
Excluding the more volatile food and energy components, the rate of core consumer prices picked up 0.3% in December following an increase of 0.2% in November.
Shelter or housing prices for the month increased, up 0.8% from 0.6%. In addition, they surged 7.5% year-over-year for their biggest 12-month advance since July 1982.
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. This index accounts for about one-third of the entire CPI.
Compared to a year earlier, airline fares increased 28.5% from 36%. They fell 3.1% in December. For some recent monthly comparisons, they registered increases as high as 12.6% in May and 18.6% in April, which was the largest 1-month gain since the inception of the series in 1963.
In other pricing categories:
- Clothing prices for the month rose 0.5% after rising 0.2%. They increased 2.9% from a year ago.
- New vehicle prices dipped 0.1% in December after being unchanged in November, while they increased 5.9% year-over-year. Prior to November, they had registered eighteen monthly advances in nineteen months.
- Prices for used car and truck dropped for a six month in a row, falling 2.5%, while their year-on-year level declined 8.8%. In February and a stark contrast, they had logged a year-on-year increase of 41.2%.
As for the headline annual figure, inflation rose 6.5% over the past 12 months, the first reading below 7% since November 2021 and compared to 7.1% previously. Last year’s high-water mark happened in the 12-month period ending July at 9.1%, which marked the fastest rate of inflation since November 1981. Inflation rates have topped 6% for fifteen consecutive months.
"Inflation is quickly moderating. Obviously, it’s still painfully high, but it’s quickly moving in the right direction," CNBC quoted Mark Zandi, chief economist at Moody’s Analytics. "I see nothing but good news in the report except for the top-line number: 6.5% is way too high."
Meanwhile, core inflation advanced 5.7% over the past year against 6% previously. 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 guides the central bank when setting its key interest rate. As recently as September, the annual core rate at 6.6% was the highest since August 1982.
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. 12, 2023. 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 2022 to December 2022 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
|June 2022||July 2022||Aug 2022||Sept 2022||Oct 2022||Nov 2022||Dec 2022||12 Month|
|Food at home||1.0||1.3||0.7||0.7||0.4||0.5||0.2||11.8|
|Food away from home||0.9||0.7||0.9||0.9||0.9||0.5||0.4||8.3|
|Gasoline (all types)||11.2||-7.7||-10.6||-4.9||4.0||-2.0||-9.4||-1.5|
|Utility (piped) gas service||8.2||-3.6||3.5||2.9||-4.6||-3.5||3.0||19.3|
|All items less food, energy||0.7||0.3||0.6||0.6||0.3||0.2||0.3||5.7|
|Commodities less food, energy||0.8||0.2||0.5||0.0||-0.4||-0.5||-0.3||2.1|
|Used cars and trucks||1.6||-0.4||-0.1||-1.1||-2.4||-2.9||-2.5||-8.8|
|Services less energy||0.7||0.4||0.6||0.8||0.5||0.4||0.5||7.0|
The BLS releases inflation data around the middle of a month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for December and the latest annual period become public on Feb. 14, 2023.
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.