RBC Chief Economist Frances Donald explains how inflation affects the average household in Making Money.
Inflation rose in December to its highest level since July, with much of the rise due to higher energy and food prices.
The Department of Labor released December's Consumer Price Index (CPI), a broad measure of the prices of daily necessities such as gasoline, groceries and rent, showing prices rose 2.9% year-on-year, after rising 0.4% year-on-year. It was shown that This was higher than LSEG economists expected.
Much of the price increase is due to soaring energy and food costs, which are putting pressure on household budgets.
Energy prices accounted for more than 40% of the monthly CPI increase, as the Bureau of Labor Statistics' energy index rose 2.6% in December, even though energy prices showed little change in the previous month and fell 0.5% on an annual basis last year. This was due to the rise in month.
Inflation rose 2.9% in December, as expected
Energy prices recorded a notable increase in December, with gas prices being a prominent factor. (Luis Cinco/Los Angeles Times via Getty Images/File)
Energy prices were flat in July, fell by 0.8% and 1.9% in August and September, respectively, and were flat in October. It rose 0.2% in November and 2.6% in December.
Gasoline prices rose 4.4% in December, contributing significantly to the rise in the energy index. Similar to the broader energy index, gasoline prices fell 0.6% in August, 4.1% in September, and 0.9% in October, before rising at the end of the year and rising in November ahead of last month's large increase. It rose by 0.6%. .
City gas service prices also rose in December, rising 2.4% month-on-month and 4.9% on an annual basis.
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Food prices also recorded a notable increase in December, rising by 0.3% for the month. Contrary to the trend in energy prices, food costs have also been rising slowly in recent months.
Back in June, the smallest monthly increases in food prices were 0.1% in June and July, and 0.2% in October. Ahead of December's CPI report, larger increases of 0.4% were recorded in September and November.
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The outbreak of avian influenza has tightened the supply of eggs, contributing to soaring prices. (Reuters/Dado Ruvic/File)
The BLS food price index shows that food costs outside the home have increased twice as much as food costs at home over the past year, with the former rising 3.6% compared to 1.8% over the past 12 months. .
Among the foods tracked by the BLS, eggs continue to have the most volatile price movements, rising 3.2% in December, pushing the 12-month increase to 36.8%. An outbreak of bird flu over the past year has disrupted the egg supply.
“Supply remains the biggest challenge in the market as highly pathogenic avian influenza (HPAI) continues to impact commercial egg-laying flocks into the new year,” the U.S. Department of Agriculture said in a report this month. ” he pointed out.
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Beef prices also rose faster than overall food prices in December, both on an annual and monthly basis. Beef and veal prices in December rose 0.5% from the previous month and 4.9% from a year earlier.
