U.S. Consumer Price Index 2021 Gain is Strongest in Forty Years

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 February 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 October 1982. 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.