Piper Sandler Chief Global Economist Nancy Lazar details her economic expectations for the second half of the fiscal year on ‘Mornings with Maria.’
Inflation marched higher in December as an uptick in the cost of rent and food kept prices elevated for millions of U.S. households.
The Labor Department said Thursday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.3% in December from the previous month, more than expected.
Prices climbed 3.4% from the same time last year, coming in above both the expectation from Refinitiv economists and the 3.1% gain recorded in November.
“In the two-steps-forward-one-step-back inflation battle, December was a clear step back,” said Robert Frick, corporate economist with Navy Federal Credit Union.
Here is a breakdown of where Americans are seeing prices rising and falling the fastest as they continue to wrestle with sticker shock.
INFLATION CLIMBS FASTER THAN EXPECTED IN DECEMBER AS HIGH PRICES PERSIST
Rising rents are a concerning development because higher housing costs most directly and acutely affect household budgets. (Gabby Jones/Bloomberg/File / Getty Images)
Rent
Housing costs were the biggest driver of core inflation last month. Rent costs rose 0.4% for the month and are up 6.2% from the same time last year.
Rising rents are concerning because higher housing costs most directly and acutely affect household budgets. Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home climbed by 0.5% from the previous month.
“Housing continues to play an outsized role in keeping inflation above the Fed’s target,” said Lisa Sturtevant, Bright MLS chief economist. “Shelter inflation has come down over the past few months, but in December, the shelter index was still up 6.2% year-over-year.”
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A customer shops for meat at a Safeway store in San Rafael, California, on April 12, 2023. (Justin Sullivan / Getty Images)
Food
Food has been one of the most visceral reminders of red-hot inflation for Americans. In December, the cost of groceries increased for the ninth straight month.
Grocery prices climbed 0.1% over the course of the month, according to the data. On an annual basis, prices remain up 1.3% compared with the same time last year.
The cost of eggs surged 8.9% in December amid another outbreak of the avian flu. Consumers also paid more for other staples, including rice (0.1%), ham (2.6%), pork (0.3%), milk (0.5%), ice cream (1%), apples (0.2%), citrus fruits (0.7%) and juice and other non-carbonated drinks (0.5%).
However, there were also some substantial declines in food prices last month. The cost of breakfast cereal, coffee, bread and fresh vegetables, including potatoes and lettuce, all fell in December.
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There was some good and bad news for Americans looking to buy a used car in August. (Chandan Khanna/AFP/File / Getty Images)
Energy
Energy prices ticked higher in December after declining the previous two months. Prices rose 0.4% during the month, including a 0.2% increase in gasoline.
Gasoline costs had previously been trending downward despite major supply cuts by OPEC+ and turmoil in the Middle East.
The average cost of a gallon of regular gasoline rose to $3.15 last month, according to AAA. Prices have dropped since then, with the average cost hovering around $3.07 on Thursday.
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“Consumers felt the most immediate pain in December from higher food and energy prices, and those are the two commodities Americans are most sensitive to,” Frick said.
Cars
There was some bad news for Americans looking to buy a new car in December.
The cost of new cars and trucks inched higher last month, rising 0.3%. New vehicle prices remain up 1% year over year.
Used car and truck prices — which were a major component of the inflation spike last year — also rose for the second straight month in December following the conclusion of the UAW strike against Ford, Stellantis and General Motors.
Prices remain down 1.3% from the same time last year.
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Travel and Transportation
A United Airlines Airbus 320 is seen parked at Dulles Washington International Airport in Dulles, Virginia, on Aug. 14, 2021. (DANIEL SLIM/AFP via Getty Images / Getty Images)
Airline tickets snapped a cooling streak in December, rising 1% over the duration of the month. The cost of tickets is down about 9.4% when compared with last year, according to the data.
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