US inflation increased to its highest level since July 2023, reaching 2.9% year-on-year due to soaring energy and food costs. The Labor Department's consumer price index (CPI) revealed a 0.4% monthly surge, exceeding economists' expectations. Energy prices, particularly gasoline, were the primary drivers, while food prices also experienced a notable uptick.
Inflation rose in December to its highest level since July with much of the increase driven by increasing energy and food prices. The Labor Department released the consumer price index – a broad measure of how much everyday goods like gasoline, groceries and rent cost – for December, which showed that prices were 2.9% higher than a year ago following a 0.4% increase from the prior month, which was larger than what LSEG economists estimated.
Energy prices were flat in July, then posted declines of 0.8% and 1.9% in August and September, respectively, before flattening out in October. They rose by 0.2% in November before the larger 2.6% uptick in December. Gas prices were a significant contributor to the rise in the energy index, as they increased 4.4% in December. Similar to the broader energy index, gas prices had declined by 0.6% in August, 4.1% in September and 0.9% in October before rising at the end of the year with a gain of 0.
Within the BLS' food price index, the cost of food away from home has increased by twice as much as food at home over the past year, with the former rising by 3.6% in the last 12 months compared to 1.8% for the latter. Eggs continued to experience significant price volatility among food items tracked by the BLS, rising 3.2% in December to push the 12-month rise to 36.8%. Egg supplies have been disrupted by an avian flu outbreak over the past year. The U.S.
INFLATION ENERGY PRICES FOOD PRICES CONSUMER PRICE INDEX CPI
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