Rising energy and food prices led to a 0.4% increase in the overall monthly Consumer Price Index (CPI) for December, according to data released by the U.S. Bureau of Labor Statistics on Wednesday. The annual inflation rate concluded the year at 2.9%, marking the highest level since July 2024.
The annual inflation rate showed variability throughout the latter half of 2024, moving from 2.5% in August to 2.7% in November.
In contrast, the core index, which excludes volatile food and energy prices, indicated a slowdown in inflation, dropping by 0.1 percentage points from November's annual rate of 3.3%. Wall Street responded positively to this development with a surge in stock market activity following the release of the December CPI report.
Energy prices rose significantly by 2.6% in December, contributing to over 40% of the all-items index increase. While gasoline prices increased by 4.4% for December, they were still down by 3.4% compared to December 2023 on an annual basis.
Electricity and natural gas prices also saw increases on a monthly scale, with electricity ending the year up by 2.8% compared to December 2023 and piped natural gas rising by 4.9%.
The food index rose by 0.3% for December and was up by 2.5% compared to a year ago.
Meanwhile, the core index climbed by only 0.2% in December, ending at an annual rate of 3.2%, lower than November's recorded rate of 3.3%. Within this category, new vehicle prices increased by 0.5%, while used vehicles saw a rise of 1.2%. Airline fares jumped notably by 3.9%, after just a modest increase in November.
On an annual comparison, new vehicle prices decreased slightly by 0.4%, and used vehicles were cheaper last month than they were a year prior by about 3.3%. However, airline fares showed a substantial yearly increase of about 7.9%.
Shelter costs rose consistently at a monthly rate of around 0.3%, matching November’s increase and showing an overall yearly rise of about 4.6%.
Other major indexes like personal care, communication, and alcoholic beverages experienced declines over the month.
