Consumer prices in the U.S. ended 2024 with a bang, jumping more than anticipated, but a closer look at the numbers reveals a silver lining in core inflation.
- M-O-M: Consumer prices rose 0.4% on a seasonally adjusted basis in December, following a 0.3% increase in November — the largest monthly rise since March.
- Y-O-Y: The all-items index for the year climbed to 2.9%, up from 2.7% the previous month, marking the highest annual rate since July.
Food & Energy: The food index saw a 0.3% increase in December, down slightly from November’s 0.4%, with the annual food inflation rate up to 2.5%. Energy costs surged by 2.6% in December, contributing to over 40% of the month’s all-items increase.
- Despite this, energy prices remain down by 0.5% year-over-year, with gasoline prices up 4.4% for the month but down 3.4% annually.
The Core: Core prices, excluding food and energy, rose by a modest 0.2% in December, a decrease from the 0.3% seen in the previous four months. The annual core inflation rate dipped to 3.2%, down from 3.3% in November, signaling the first decrease since July.
Housing’s Slow Fall: Shelter costs increased by 0.3% for the second consecutive month, yet the annual rate for shelter fell to 4.6%, the lowest since January 2022, indicating some cooling in this significant component of the CPI.
Bottom Line: Despite a higher top line, core inflation unexpectedly slowed which gave some hope that inflation might still be under control.