The U.S. cost of living increased solidly in December, boosting the inflation rate for 2021 to the highest level in nearly four decades, according to a government report released Wednesday, Jan. 12.
Last month gasoline prices decreased for the first time in over a half year, but prices climbed yet again for shelter, food, vehicles, health care and clothing. Across the longer haul, Americans in 2021 paid a lot more for virtually everything they bought.
In the headline monthly figure, U.S. consumer prices increased 0.5% in December after advancing 0.8% 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.
Notably, consumer prices rose 0.9% in October and in June, for their largest monthly gains since advancing 1% in June 2008.
In several key consumer pricing categories:
Prices at the pump dipped 0.5% in December, for their first drop since May, and after two straight 6.1% monthly increases. Gas prices jumped 49.6% from a year earlier. Previously, they were up 58.1% year-over-year, registering their biggest 12-month increase since April 1980.
The broader index for energy, which combines items like gasoline, electricity, and fuel oil, edged 0.4% lower last month after rising 3.5% in November. Energy prices climbed 29.3% in the past 12 months.
- Overall food prices for the month rose 0.5% after increasing 0.7%. Food prices surged 6.3% in 2021, with the cost of groceries rising 6.5% and the cost of eating out up 6%.
Excluding the more volatile food and energy components, core consumer prices picked up 0.6% in December after rising 0.5% in November. Both represent smaller gains than the matching 0.9% increases in April and June — the highest points since April 1982.
"This was the sixth time in the last 9 months it has increased at least 0.5 percent. Along with the indexes for shelter and for used cars and trucks, the indexes for household furnishings and operations, apparel, new vehicles, and medical care all increased in December," the Labor Department’s monthly report said.
Shelter or housing costs ran 0.4% quicker following two straight months of 0.5% gains, and they rose 4.1% from a year earlier. 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.
"There is no sugarcoating December’s CPI data," MarketWatch quoted corporate economist Robert Frick of Navy Federal Credit Union. "With the exception of energy prices, which are dropping, the main drivers of the highest inflation since 1982 will remain high for the foreseeable future.
New vehicle prices rose 1% from 1.1% and surged 11.8% in 2021. Used car and truck prices, meanwhile, advanced 3.5% after matching increases of 2.5% in November and October. They soared 37.3% in 2021.
"The December CPI showed strong demand and supply bottlenecks still at play, with goods inflation driven higher by auto and apparel prices. A step-down in services prices may prove misleading, with shelter costs set to be a growing source of upward pressure in 2022," Bloomberg News quoted economists Andrew Husby and Yelena Shulyatyeva.
Clothing prices increased 1.7% in December after rising 1.3% in November. They climbed 5.8% from a year earlier.
In the headline annual figure, inflation advanced 7% year-over-year, marking the highest 12-month inflation rate since June 1982 and after jumping 6.8% previously.
Core inflation surged 5.5% over the past year, registering as the largest increase since the annual period ending February 1991 and compares to 4.9% 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 helps the central bank decide where to set its key interest rate.
"This is the first time the Fed has chased instead of trying to preempt a nonexistent inflation since the 1980s," Reuters quoted Diane Swonk, chief economist at Grant Thornton in Chicago. "Brace yourselves."
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, 2022. 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 2021 Consumer Prices – Gains & Losses in Percent
|June 2021||July 2021||August 2021||September 2021||October 2021||November 2021||December 2021||12 Month|
|Food at home||0.8||0.7||0.4||1.2||1.0||0.8||0.4||6.5|
|Food away from home||0.7||0.8||0.4||0.5||0.8||0.6||0.6||6.0|
|Gasoline (all types)||2.5||2.4||2.8||1.2||6.1||6.1||-0.5||49.6|
|Utility (piped) gas service||1.7||2.2||1.6||2.7||6.6||0.6||-1.2||24.1|
|All items less food, energy||0.9||0.3||0.1||0.2||0.6||0.5||0.6||5.5|
|Commodities less food, energy||2.2||0.5||0.3||0.2||1.0||0.9||1.2||10.7|
|Used cars and trucks||10.5||0.2||-1.5||-0.7||2.5||2.5||3.5||37.3|
|Services less energy||0.4||0.3||.0||0.2||0.4||0.4||0.3||3.7|
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 January and the latest annual period become public on Feb. 10, 2022.
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.