In December, inflation in the United States experienced an uptick, driven primarily by rising prices in gasoline, eggs, and used cars. However, there were indications that underlying price pressures might be easing.
According to a Labor Department report, the consumer price index (CPI) increased by 2.9% in December compared to the previous year, marking the highest annual rise since July. This increase came after a 2.7% rise in November, continuing a steady upward trend following a three-and-a-half-year low of 2.4% in September.
Excluding the often volatile categories of food and energy, the core inflation rate decreased to 3.1%. It had been stable at 3.3% for three months. This deceleration in core inflation was positively received on Wall Street, causing Dow Jones futures to climb nearly 700 points immediately after the report’s release.
Economists and investors remain concerned about inflation staying above the Federal Reserve’s target of 2%. Despite a consistent decrease in prices throughout 2023 and much of the preceding year, Treasury bond yields have risen, leading to increased borrowing costs for mortgages, automobiles, and credit cards.
Nevertheless, the overall rise in consumer prices highlights that inflation remains persistent. The potential for inflationary policies under the incoming administration, such as universal tariffs and mass deportations of unauthorized migrants, adds to these concerns.
December saw a 3.2% rise in egg prices, influenced by an avian flu outbreak that significantly impacted supply. Gasoline prices also increased by 4.4%, with the national average price per gallon reaching $3.09, which is slightly higher than in November and only 2 cents more than at the same time last year.
On a month-to-month basis, consumer prices rose 0.4% in December, representing the largest monthly increase since the previous March. Core prices climbed by just 0.2%, following four consecutive months of 0.3% increases. This suggests some easing of pricing pressures.
The December inflation report underscores the ongoing challenges of managing rising prices while navigating economic transition periods. Despite some signs of easing in core inflation, persistent price increases in key areas like gasoline and eggs continue to pose significant challenges.
