Reduced Energy Costs Keep Consumer Price Inflation in December in Check

The Bureau of Labor Statistics reported that consumer prices edged up 0.1 percent in December, slowing from the 0.4 percent gain in November. Reduced energy costs, which declined 1.2 percent for the month, helped to keep consumer inflation in check in December, with gasoline prices off 2.7 percent. This is largely consistent with data from the Energy Information Administration, which pegged the average price for regular conventional gasoline at $2.47 per gallon on November 6, falling to $2.36 a gallon on December 25. (Note that costs have risen since then, averaging $2.43 per gallon on January 8.) In contrast, food prices rose 0.2 percent in December. Since December 2016, food and energy costs have increased 1.6 percent and 6.9 percent, respectively.

Excluding food and energy, core consumer inflation increased 0.3 percent in December, its fastest monthly pace since January. Prices rose in every major category except apparel (down 0.5 percent), including significant gains for used cars and trucks (up 1.4 percent), medical care commodities (up 1.0 percent) and new vehicles (up 0.6 percent).

Overall, the consumer price index increased 2.1 percent year-over-year in December, easing from 2.2 percent in November. Pricing pressures have accelerated since June’s 1.6 percent year-over-year reading, but the current pace remains well below the 2.8 percent pace in February. In addition, core consumer prices, which exclude food and energy costs, have risen 1.8 percent over the past 12 months, up slightly from 1.7 percent in the prior release.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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