To the relief of this nation, inflation in the United States, measured annually, fell again in December, showing a decline since last October, when gasoline prices dropped and airline fares also decreased.
The Consumer Price Index rose 6.5% in the year up to last month, down from 7.1% in the November reading.
One of the major categories that pulled down overall inflation was gasoline, which saw a significant price drop in December. Energy prices overall fell 4.5% on a monthly basis.
Food prices rose 0.3%, a slight deceleration compared to previous readings, although some products experienced large increases, such as eggs, which rose about 11% just in December.
However, the reason for the increase in egg prices is due to a low supply, as the severe avian flu that affected the country this year disrupted the supply of this product to markets.
Rents continued to rise, putting upward pressure on inflation. Housing costs increased sharply throughout the month, with rents rising 0.8%. Economists expect this gain to slow down in 2023.
It is also expected that the prices of many products will rise more slowly – or even fall completely – as supply chains recover. Used cars and trucks, a major driver of inflation, became cheaper last month, and new cars also saw a slight price drop. But clothing prices, which many economists expected to show a sharp deceleration in December, rose.
The costs of services may help keep inflation above normal. Wage gains continue to occur, so experts fear this will lead service providers – such as hotels and daycare centers – to continue raising prices.
The conclusion is that inflation is moderating significantly. But the key question now is how quickly and intensely it will return to normal after a year and a half of extraordinarily rapid increases.