For the first time since 2020, the U.S. saw deflation in consumer prices for the month. Overall consumer prices in December declined 0.1% from November, according to the latest Bureau of Labor Statistics (BLS) report.
Annual consumer inflation rose 6.5% from a year ago, down from November’s 7.1% increase and significantly below June’s 9.1% peak. December’s monthly and annual rates were right on target for economists.
Gas was the biggest contributor in pushing down prices, according to the BLS. The index fell 9.4% for the month, while gas prices are actually showing an annual decline as well, falling 1.5% from one year ago.
Another major decline is in used cars and trucks, down 2.5% on the month and down 8.8% on the year. Used car prices are often seen as an early indicator of the future path of inflation. The price index has been falling for six straight months.
Despite the overall downward path, there are still some persistent and rising areas. The shelter index, for example, is now up 7.5% from a year ago, outpacing overall inflation. It rose 0.8% on the month.
Food prices are also still climbing, but at a much slower monthly pace. The overall food index rose 0.3% on the month and 10.4% on the year. The monthly rise is the smallest seen since 2021. The index for meats, poultry, fish and eggs rose 1% in December, driven largely by eggs, which are up 11.1%. Meanwhile, the prices of fruits, vegetables and dairy are on the decline for the month.
President Joe Biden plans to address the country about inflation later Thursday morning. Meanwhile, the consistent downward trend in annual consumer inflation has economists wondering if the Federal Reserve has seen enough to ease up on hiking interest rates. Many are speculating the Fed could raise interest rates by just 0.25% at their next meeting at the end of the month, after several months of larger hikes.