RBC Chief Economist Francis Donald explains how inflation affects how average families make money.
inflation increased In December it reached its highest level since July, with most of the increase driven by rising energy and food prices.
Labor Department issued Consumer Price Index (CPI) — a broad measure of the cost of everyday items like gasoline, groceries and rent — for December, which showed that prices were 2.9% higher than a year earlier, after rising 0.4% from the previous month. Which was larger than the estimates of LSEG economists. ,
Much of the increase in prices is due to higher energy and food costs which are putting pressure on household budgets.
More than 40% of the increase in monthly CPI was due to rising energy prices, as the Bureau of Labor Statistics’ energy index rose 2.6% in December, as energy prices showed little change in the previous months and on an annual basis last year. But there was a decline of 0.5%. month.
Inflation rose 2.9% in December, in line with expectations
Energy prices recorded a significant increase in December, with gas prices contributing significantly. (Luis Cinco/Los Angeles Times via Getty Images/File)
energy prices were stable in July, then declined by 0.8% and 1.9% respectively in August and September, before stabilizing in October. They rose 0.2% in November before a bigger rise of 2.6% in December.
gas prices They were an important contributor to the increase in the energy index, as their increase in December was 4.4%. Similar to the broader energy index, gas prices fell 0.6% in August, 4.1% in September and 0.9% in October, before ending the year with a 0.6% gain in November, following a big rise the previous month. First .
price of utility gas service There was also growth in December, which increased 2.4% from the previous month and 4.9% on an annual basis.
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food prices Notable growth was also recorded in December, rising 0.3% on the month. In contrast to the trend in energy prices, food costs have seen similar modest increases in recent months.
Starting in June, the smallest monthly increases in food prices were 0.1% in June, 0.1% in July and 0.2% in October. September and November posted a larger increase of 0.4% in the lead up to the December CPI report.
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The bird flu outbreak has led to a shortage in the supply of eggs, leading to a rise in prices. (Reuters/Dado Ruvik/File)
Within the BLS’s food price index, the cost of meals away from home has increased twice as much as meals at home over the past year, with the former increasing by 3.6% over the past 12 months, while the latter has increased by 1.8%. .
The price of eggs continued to experience significant volatility among food items tracked by the BLS, rising 3.2% in December and leading to a 12-month increase of 36.8%. Egg supply has been disrupted due to the outbreak of avian flu last year.
US Department of Agriculture “Supply remains the biggest challenge to the market as highly pathogenic avian influenza (HPAI) continues to impact commercial table egg layer flocks into the new year,” a report this month said.
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On an annual and monthly basis, December saw beef prices rise faster than overall food prices. Beef and veal prices rose 0.5% in December from the previous month and are 4.9% higher than a year earlier.