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Economy in Brief

U.S. Consumer Price Inflation Picks Up in December; Core Price Gain Decelerates
by Tom Moeller  January 13, 2021

• Energy & food prices strengthened last month.

• Pricing power in 2020 remained under control.

• Goods price inflation inched up while services decelerated.

Retail pricing power remained limited last year. The Consumer Price Index rose 0.4% during December following a 0.2% November rise. The gain matched expectations in the Action Economics Forecast Survey. Year-to-year, the index advanced 1.4%. The CPI excluding food & energy edged 0.1% higher last month following a 0.2% rise. A 0.2% gain had been expected. During the last twelve months, prices rose 1.6%.

A 4.0% increase (-7.0% y/y) in energy product prices bolstered the rise in retail prices last month as it followed a 0.4% rise in November. Fuel oil prices surged 10.2% (NSA, -20.0% y/y) following a 3.6% rise. Gasoline prices rebounded 8.4% (-15.2% y/y) after easing 0.4%. The cost of electricity increased 0.4% (2.2% y/y) while natural gas prices eased 0.8% (+4.1% y/y) after a 3.1% gain.

Food prices improved 0.4% and by a strengthened 3.9% y/y, after easing 0.1% in November. Food-at-home prices also rose 0.4% (3.9% y/y). The increase reflected a 1.1% strengthening (4.4% y/y) in the cost of nonalcoholic beverages. Dairy prices strengthened 0.8% (4.4% y/y) while cereal & bakery product costs rose 0.4% (3.2% y/y). Elsewhere, pricing power was tame last month. Meat, poultry & fish prices held steady (5.0% y/y). Egg prices declined 3.5% (-1.5% y/y) while fruit & vegetable prices eased 0.2% (+3.2% y/y). Prices for food away from home rose 0.4% (3.9% y/y).

Goods prices excluding food & energy improved 0.2% last month (1.7% y/y) after edging 0.1% higher during November. Apparel prices surged 1.4% (-3.9% y/y) after gaining 0.9% in November. Sporting goods prices rose 0.5% (2.5% y/y) after rising 0.7%. Prices for education & communication goods increased 0.8% (-2.5% y/y) following a 0.4% rise. New vehicle prices rose 0.4% (2.0% y/y). Recreation product prices improved 0.2% (-0.2% y/y). To the downside were used car & truck prices which fell 1.2% (+10.0% y/y) following two months of easing prices. Medical care product costs fell 0.4% (-2.5% y/y), the fourth decline in the last five months. Household furnishings prices slipped 0.1% last month (2.9% y/y) after rising 0.9%. Household appliance prices fell 0.2% (+6.2% y/y) after strengthening 2.2% in November.

Services prices improved 0.1% in December (1.6% y/y) after a 0.2% rise. Shelter costs rose 0.1% for the fifth straight month and by a greatly lessened 1.8% y/y. The owners' equivalent rent of primary residences also rose 0.1% and gained 2.2% y/y. Education & communication services prices improved 0.1% (2.3%y/y) following no change in November. Falling were recreation services prices by 0.5% (1.6% y/y) which fully reversed November's increase. The cost of public transportation fell 0.7% (-12.0% y/y). Medical care services prices eased 0.1% (+2.8% y/y), down for the third straight month.

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

The Fed's latest Beige Book covering regional economic conditions can be found here.

Consumer Price Index, All Urban Consumers (% chg) Dec Nov Oct Dec Y/Y 2020 2019 2018
Total 0.4 0.2 0.0 1.4 1.2 1.8 2.4
Total less Food & Energy 0.1 0.2 0.0 1.6 1.7 2.2 2.1
  Goods less Food & Energy 0.2 0.1 -0.2 1.7 0.1 0.2 -0.2
  Services less Energy 0.1 0.2 0.1 1.6 2.2 2.8 2.9
 Food 0.4 -0.1 0.2 3.9 3.4 1.9 1.4
 Energy 4.0 0.4 0.1 -7.0 -8.5 -2.1 7.5
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