Rising energy and food prices pushed the overall monthly Consumer Price Index up 0.4% in December, but the annual inflation rate finished out the year at 2.9%, according to data released Wednesday by the U.S. Bureau of Labor Statistics.
The 2.9% inflation rate is the highest since the 12-month period that ended in July 2024. Since then, the annual inflation rate has fluctuated between 2.5% in August to 2.7% in November.
However, the so-called core-index, which excludes more volatile food and energy prices, showed signs that inflation is slowing, dropping 0.1 percentage point from November’s 3.3% annual rate, where it had been stuck for four months.
Wall Street reacted favorably to the news about core inflation slowing and the stock market surged after the December CPI report was released.
All-items Index
Energy prices rose 2.6% in December, accounting for more than 40% of the all-items increase. The gasoline index increased 4.4% for the month, but on an annual basis gasoline prices were 3.4% lower in December 2024 than in December 2023.
Prices for electricity and natural gas also increased on a monthly basis. Electricity prices ended the year in December 2.8% higher than in December 2023. Piped natural gas prices were 4.9% higher for the 12-month period ending in December.
The food index also increased (+0.3%) for the month and ended the year with prices 2.5% higher than December 2023.
Core Index
The core index was up 0.2% in December and ended the year at 3.2%. This was lower than the 3.3% inflation rate recorded on the core index for the 12-month period ending in November. Within the core index, prices increased 0.5% for new vehicles and 1.2% for used vehicles. Airline fares increased 3.9% in December after rising only 0.4% in November.
However, viewed on an annual basis, new vehicle prices were down 0.4% for the 12-month period that ended in December and used vehicles cost 3.3% less last month than they did in December 2023. Airline fares were up 7.9% over the same 12-month period.
The cost of shelter increased 0.3% in December, the same as the increase for November. Viewed on an annual basis, the cost of shelter was 4.6% higher over the 12-month period ending in December 2023.
The indexes for personal care, communication, and alcoholic beverages were among the major indexes that decreased over the month.
