U.S. consumer prices increased more than expected in December as Americans paid more for shelter, medical care and gasoline. When it comes to shelter, which includes rents, hotel and motel stays, and school housing, it accounted for more than half of the monthly increase in consumer prices.
In the headline figure for the month, U.S. consumer prices increased by 0.3% in December, after rising by 0.1% in November, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from eggs to energy. The widely reported consensus for the month was a 0.2% monthly increase.
Overall, food prices for the month increased by 0.2% for a second consecutive month. Within the food category, grocery prices edged up by 0.1%, also for a second month in a row. Egg prices soared 8.9% on the month, although they were still down 23.8% from a year ago. Additionally, dining-out expenses rose by 0.3% following three straight increases of 0.4%.
Meanwhile, food inflation in the past year has continued to stay high at 2.7%, though it is lower than the previous rate of 2.9%. During this same period, grocery prices experienced a 1.3% increase, whereas the cost of dining out rose by 5.2%. These figures contrast with their prior rates of 1.7% for groceries and 5.3% for dining out.
In other sectors, prices at the pump edged up by 0.2% in December, contrasting with the previous month’s 6% decline. When looking at a year-on-year comparison, gas prices declined by 1.9%, compared to the previous drop of 8.9%. To offer some context, the inflation rate for gasoline over the 12 months ending in June 2022 surged by 59.9%, marking the highest level since March 1980.
The broader energy index, which includes items like gasoline, electricity, and fuel oil, increased by 0.4% in December, following a 2.3% decrease in November. Energy prices year-over-year declined by 2%, which compares to the previously recorded decline of 5.4%.
Excluding volatile food and energy components, the rate of core consumer prices in December rose by 0.3%, as they did in November.
Shelter or housing prices increased by 0.5% during the month, marking their 44th consecutive monthly rise. This follows a 0.4% increase in November and represents another substantial year-over-year growth of 6.2%.
"The index for shelter continued to rise in December, contributing over half of the monthly all items increase," the Labor Department’s monthly report said.
For some recent 12-month comparisons, they recorded increases of 6.5% in November, 6.7% in October, 7.2% in September, 7.3% in August, 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, posting their most significant annual increase since June 1982.
Components of shelter include prices of 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.
In other closely watched pricing areas:
- Clothing prices inched up by 1.3% for the month after declining by 1.3% previously. They increased 1% from a year ago.
- New vehicle prices increased by 0.3% following two consecutively declines of 0.1%. They showed a year-over-year increase of 1%.
- Prices for used cars and trucks rose by 0.5% in December, after rising by 1.6% previously. In comparison to prices from a year ago, they have declined by 1.3%. These rates stand in stark contrast to the situation in February of the previous year when they experienced a sharp year-on-year increase of 41.2%.
- When compared to the previous year, airline fares dropped by 9.4%. As for the month, they rose by 1% following a 0.4% decline.
In terms of the headline annual rate, inflation increased to 3.4% for the year, quickening from the 3.1% rate reported for the 12 months ending in November. Commonly reported expectations for the year indicated an advance of 3.2%.
For some perspective, there was a notable peak in the inflation rate at 9.1% during the 12-month period ending in July 2022. It was the quickest rate of inflation since November 1981. Additionally, until March, inflation rates had been at or above 6% for 17 consecutive months.
Meanwhile, core inflation increased by 3.9% in the year through December, the slowest since May 2021 and down slightly from the previous rate of 4%. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.
"Overall, today’s inflation data makes a March rate cut seem like a less likely scenario," Reuters quoted Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis.
As recently as September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
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. 11, 2024. 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 2023 to December 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
| June 2023 | July 2023 | Aug 2023 | Sept 2023 | Oct 2023 | Nov 2023 | Dec 2023 | 12 Month | |
| All items | 0.2 | 0.2 | 0.6 | 0.4 | 0.0 | 0.1 | 0.3 | 3.4 |
| Food | 0.1 | 0.2 | 0.2 | 0.2 | 0.3 | 0.2 | 0.2 | 2.7 |
| Food at home | 0.0 | 0.3 | 0.2 | 0.1 | 0.3 | 0.1 | 0.1 | 1.1 |
| Food away from home | 0.4 | 0.2 | 0.3 | 0.4 | 0.4 | 0.4 | 0.3 | 5.2 |
| Energy | 0.6 | 0.1 | 5.6 | 1.5 | -2.5 | -2.3 | 0.4 | -2.0 |
| Energy commodities | 0.8 | 0.3 | 10.5 | 2.3 | -4.9 | -5.8 | -0.1 | -2.9 |
| Gasoline (all types) | 1.0 | 0.2 | 10.6 | 2.1 | -5.0 | -6.0 | 0.2 | -1.9 |
| Fuel oil | -0.4 | 3.0 | 9.1 | 8.5 | -0.8 | -2.7 | -5.5 | -14.7 |
| Energy services | 0.4 | -0.1 | 0.2 | 0.6 | 0.5 | 1.7 | 0.9 | -1.1 |
| Electricity | 0.9 | -0.7 | 0.2 | 1.3 | 0.3 | 1.4 | 1.3 | 3.3 |
| Utility (piped) gas service | -1.7 | 2.0 | 0.1 | -1.9 | 1.2 | 2.8 | -0.4 | -13.8 |
| All items less food, energy | 0.2 | 0.2 | 0.3 | 0.3 | 0.2 | 0.3 | 0.3 | 3.9 |
| Commodities less food, energy | -0.1 | -0.3 | -0.1 | -0.4 | -0.1 | -0.3 | 0.0 | 0.2 |
| New vehicles | 0.0 | -0.1 | 0.3 | 0.3 | -0.1 | -0.1 | 0.3 | 1.0 |
| Used cars and trucks | -0.5 | -1.3 | -1.2 | -2.5 | -0.8 | 1.6 | 0.5 | -1.3 |
| Apparel | 0.3 | 0.0 | 0.2 | -0.8 | 0.1 | -1.3 | 0.1 | 1.0 |
| Medical care | 0.2 | 0.5 | 0.6 | -0.3 | 0.4 | 0.5 | -0.1 | 4.7 |
| Services less energy | 0.3 | 0.4 | 0.4 | 0.6 | 0.3 | 0.5 | 0.4 | 5.3 |
| Shelter | 0.4 | 0.4 | 0.3 | 0.6 | 0.3 | 0.4 | 0.5 | 6.2 |
| Transportation | 0.1 | 0.3 | 2.0 | 0.7 | 0.8 | 1.1 | 0.1 | 9.7 |
| Medical care | 0.0 | -0.4 | 0.1 | 0.3 | 0.3 | 0.6 | 0.7 | -0.5 |
The BLS releases inflation data around the middle of the month for consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for January and the latest annual period will be made public on Feb. 13, 2024.
The CPI data is also used to calculate inflation rates and to power this site’s U.S. Inflation Calculator. The U.S. Inflation Calculator displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.
