Prices returned to provide relief to consumers during December, mainly due to a sharp drop in gasoline prices; notwithstanding that the cost of other products and services they stood stubbornly tall.
The most recent report from the Bureau of Labor Statistics (BLS) indicated that the Consumer Price Index (CPI) stood at 6.5% last December, in its annual measurement, from the 7.1% annual rate registered last November. .
During the last month of the year, prices were reduced punctually by the cost of gasoline; while housing prices were once again the ones that most strongly fueled inflation.
According to the BLS report, the annual inflation rate reached its lowest level since October 2021; after it reached its highest level in June 2022, when it stood at 9.1% in its annual measurement.
Despite the fact that the inflation data is positive and continues adding months with falling prices, the Federal Reserve (Fed) considers that the rise in prices still uncomfortably high compared to pre-pandemic costs.
“The spike is probably in the rearview mirror, but we’re not out of the woods yetas it is still well above the Fed’s target rate,” said Mike Loewengart, head of Model Portfolio Construction at Morgan Stanley’s Global Investment Office.
Meanwhile, the BLS report offered details on the behavior of the products, both those that saw a drop in their pricesas of those who stood tall.
Housing continues to defy budgets
Housing was the strongest rising service over the past month, up 0.7% month-on-month and 7.5% year-over-year, within the core inflation measure.
This means that only housing prices accounted for about 40% of all the inflationary increase underlying during last December.
Within the housing element, rental prices were the ones that most concerned analysts, since these directly affect household budgets.
However, home prices, including rental prices, could be lagged as the BLS’s measurements lag significantly behind other analysts’ reports that have shown recent price declines.
“Rents and houses They have already begun to fall throughout the country, but that won’t show up in the data until later this year. Factor in that and factor in further declines in property prices and the annual rate of inflation could be cut in half by 2023,” Robert Frick, corporate economist at Navy Federal Credit Union, said in a report for Fox. Business.
The egg leads the rise of food
Although the egg stood out among the foods that rose the most in price during the last month of 2022, in general, this item also had an important upward movementwith an 11.8% increase on the annual basis.
High food prices remind families that inflation remains high, despite monthly reports showing that the costs of products and services are falling.
According to analysts, it is precisely food prices that remind us that inflation persists at levels that are almost triple the Fed’s target, which seeks to return to 2% per year.
Among foods, the egg took the crown, with the highest increase of 11.1% in the last month, whose prices shot up mainly due to the impacts of the avian flu epidemic.
However, it was not the only food with increases, as butter increased 2.3%, rice 0.5%, fresh vegetables 1.2%, tomatoes 4.2%, lettuce 4% and potatoes 1.8%.
Gasoline continues to give relief
The BLS highlighted that the largest price drop during December was attributed to gasoline, the product that contributed more strongly to the cooling of inflation during the last month of the year.
Overall, energy costs fell 6.1% last December; however, gasoline prices collapsed 12.5% this month, making them now 1.5% lower compared to 2021.
The carts return to the shopping list
Used cars are back an option for millions of consumers that saw their prices skyrocket in the last year, given the severe problems that the assemblers faced with the supply chains.
Now, their prices fell and last December they did so by 2.4% in their monthly comparison and up to 8.8% in its measurement year after year.
This was driven by an adjustment in the new car market, which recovered its production levels and once again attracted a sector of buyers.
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