Here’s the inflation breakdown for December 2023 — in one chart
The annual inflation rate edged higher in December following two months of declines. However, that reversal likely isn't cause for concern — and may be somewhat misleading, economists said.
«We're still making progress in the inflation fight,» said Sarah House, senior economist at Wells Fargo Economics.
The consumer price index rose 3.4% last month relative to a year earlier, the U.S. Labor Department reported Thursday. That's a larger increase than the 3.1% in November and 3.2% in October.
The index has fallen by half since December 2022 — when the inflation rate was 6.5% — and has declined significantly from the 9.1% pandemic-era peak in June 2022.
Consumers' buying power also increased over the past year: Hourly wages after accounting for inflation — so-called «real earnings» — rose by 0.8% from December 2022 to December 2023, according to the Labor Department.
The CPI, a key inflation gauge, measures how fast the prices of everything from fruits and vegetables to haircuts and concert tickets are changing across the U.S. economy.
Lower energy prices had helped pull down the overall index in recent months but didn't provide as much relief to consumers in December, economists said.
Further, so-called «base effects» made the latest yearly CPI reading seem somewhat distended, economists said. This term refers to how fluctuations in the monthly inflation rate can influence the magnitude of an annual change.
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Basically, there was an «unusually small» monthly increase (0.1%) in prices from November 2022 to December 2022, said Andrew Hunter, deputy
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