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Economy in Brief

U.S. Consumer Price Index 2021 Gain Is Strongest in Forty Years
by Tom Moeller  January 12, 2022

• Annual gain in core prices also is highest since 1982.

• Core goods prices surge and services prices strengthen y/y.

• Energy prices jump and food prices firm.

Price inflation spiked last year in response to strength in demand & liquidity. The Consumer Price Index rose 0.5% during December, after increasing an unrevised 0.8% in November. The 7.0% y/y gain was the largest since June 1982. The m/m increase matched expectations in the Action Economics Forecast Survey. The CPI excluding food & energy increased 0.6% last month following a 0.5% November rise. The 5.5% y/y core price increase was the strongest since February 1991. A 0.5% December rise had been expected.

During the last three months, the CPI overall has risen at a 9.1% annual rate. The core CPI rose at a strengthened 6.9% rate during the last three months.

Goods prices excluding food & energy surged 1.2% in December (10.7% y/y) after rising 0.9% in November. Used car & truck prices surged 3.5% (37.3% y/y) after strong gains in the prior two months. The cost of new vehicles rose 1.0% (11.8% y/y), nearly the same as in each of the prior seven months. Apparel prices strengthened 1.7% (5.8% y/y) after a 1.3% November rise. Household furnishings prices surged 1.3% (7.4% y/y) after gaining 0.7%, while prices of appliances strengthened 1.1% (6.0% y/y) after easing slightly in both of the prior two months. Recreation product prices eased 0.4% (+3.3% y/y) after gaining 0.3%, as the cost of televisions fell for the fourth straight month (+4.4% y/y). Medical care product prices held steady (0.4% y/y) after a 0.1% gain. Education & communication product costs declined 0.4% last month (+0.2% y/y), off for the third straight month.

Services prices rose 0.3% last month (3.7% y/y) after two 0.4% increases. Shelter prices increased 0.4% (4.1% y/y) following two 0.5% increases. Owners' equivalent rent of primary residences improved 0.4% (3.8% y/y) for the fourth straight month. Rents of primary residences gained 0.4% (3.3% y/y) for the third consecutive month while the cost of lodging away from home jumped 1.2% (23.9% y/y), strong for the third straight month. Recreation services prices eased 0.1% in December (+3.3% y/y) following a 0.5% decline. Transportation services prices eased 0.3% in December (+4.2% y/y) after gaining 0.7% in November, but public transportation costs surged 2.0% (2.4% y/y) after strengthening 3.0%. Prices of medical care services rose 0.3% (2.5% y/y), the same as in November. Education & communication services costs edged 0.1% higher last month (1.7% y/y) after holding steady in November.

Energy prices eased 0.4% (+29.3% y/y) following six months of strong increase. Gasoline prices slipped 0.5% (+49.6% y/y), also following six months of strength. Fuel oil & other fuels prices fell 3.4% (38.0% y/y) after rising 1.5% in November. Natural gas prices fell 1.2% (+24.1% y/y) after a 0.6% gain, while the cost of electricity rose 0.3% (6.3% y/y) for the second consecutive month.

Food price inflation was strong again, rising 0.5% (6.3% y/y) last month. Fruit & vegetable prices surged 0.9% (5.0% y/y) in December, about as they did in November. Nonalcoholic beverage prices rose 0.8% (5.2% y/y) after strength in five of the prior six months Dairy prices rose 0.7% (1.6% y/y) following two months of 0.2% increase. Cereal & bakery product costs improved 0.4% (4.8% y/y) after strong gains in four of the prior five months. Offsetting these gains, meat, poultry & fish prices eased 0.4% (+12.6% y/y) following a 1.2% increase, and egg prices held steady (+11.1% y/y) after falling 2.7%.

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.

Consumer Price Index, All Urban Consumers (% chg) Dec Nov Oct Dec Y/Y 2021  2020 2019
Total 0.5 0.8 0.9 7.0 4.7 1.2 1.8
Total less Food & Energy 0.6 0.5 0.6 5.5 3.6 1.7 2.2
  Goods less Food & Energy 1.2 0.9 1.0 10.7 6.4 0.1 0.2
  Services less Energy 0.3 0.4 0.4 3.7 2.6 2.2 2.8
 Food 0.5 0.7 0.9 6.3 3.9 3.4 1.9
 Energy -0.4 3.5 4.8 29.3 21.0 -8.5 -2.1
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