Inflation jumped at its fastest 12-month pace in nearly 40 years in December, as the surging costs continue to eat into Americans’ wages and indicate that inflationary price pressure shows no sign of easing.
The Bureau of Labor Statistics’ December Consumer Price Index (CPI) data — a metric that measures what consumers pay for the cost of goods and services, showed prices leaped at a whopping 7% in December, up from 6.8% in November. It marks the fastest pace since June 1982, and the third straight month inflation exceeded over 6%. Overall inflation rose 0.5% on a monthly basis, down from the 0.8% gain posted in November.
December’s annual inflation economists surveyed by Dow Jones had been expecting the gauge to increase 7% on an annual basis and 0.4% from November.
Excluding food and energy prices, the core measure of consumer price increased 5.5% in December over last year, representing the fastest increase since February 1991. It accelerated from a 4.9% annual gain seen in November. Monthly, core inflation jumped 0.6% from the previous month, another faster growth rate than from October to November.
Prices rose sharply in 2021 in all categorical indexes, including cars, gas, food, and furniture. Used cars and trucks index — the largest contributor to the headline increase rose for a third consecutive month and accelerated to a 3.5% in December from November’s 2.5% increase. From a year ago, used vehicles increased by another 37.3%. Shelter costs, which make up nearly one-third of the total inflation index, rose 0.4% for the month and 4.1% for the year. It was the fastest pace seen since February 2007.
Energy prices slightly declined 0.4% from last month’s surge of 3.5% — its first decrease since April 2021. Gasoline index fell 0.5% in December after rising 6.1% in both November and October, with natural gas also declining 1.2% after rising over the last ten months.
However, year-over-year, energy index as a whole rose 29.3%, with all major energy component indexes posting an annual increase. The gasoline index rose 49.6% over the last year, while the index for natural gas rose 24.1% over the last 12 months.
Food prices vastly rose 0.5% for December and were up 6.3% on a 12-month basis, the biggest rise since October 2008. Five of the six major grocery store food group indexes increased in December, with fruits and vegetables increased the most — 0.9% from last month. The index for fresh fruits increased 1.8%, with oranges, including tangerines, seeing the highest monthly price increase of 8.9%.
Meats, poultry, fish, and eggs prices saw a slight decline in December, falling 0.4% after rising 0.9% last month, 1.7% from October, and from each of the prior seven months of 2021. Annually, the meat, poultry, fish, and eggs index surged by 12.5%. “Food away from home,” namely restaurants, showed prices advanced 6% over the last 12 months from November’s annual 5.8% sharp increase and the largest increase since January 1982.
Meanwhile, the increase in costs for goods and services has effectively obliterated wage gains. In a separate data release, the Labor Department revealed real average hourly earnings for all U.S employees rose 0.1% from November to December but fell 2.4% from the previous year.
It’s the eighth straight month in which inflation has surged more than 5 percent annually under President Biden.
Biden sought to downplay the red-hot December inflation report, pivoting to tout the data as evidence his administration is “making progress in slowing the rate of price increases” while citing how gas and food prices declined for the month.
“Today’s report—which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling—demonstrates that we are making progress in slowing the rate of price increases,” Biden said in a prepared statement.
The surge in prices has put Biden on the defensive to tackle the issue that most Americans view inflation as their biggest concern ahead of the 2022 midterms. For months, Biden dismissed the early trouble signs of inflation as “transitory” while ignoring economists’ warnings. Former President Obama Treasury Secretary Larry Summers warned not to pump the $1.9 trillion “American Rescue Plan” government stimulus package into an already rebounding economy.
The latest inflation data drew scathing reactions from Republicans who slammed Biden for fueling the problem with his “tax-and-spend agenda” and ignoring the crisis to focus on Democrats’ “radical plan to federalize elections.”
“Joe Biden’s presidency has been nothing but non-stop failure. Since Biden took office, Americans have been hit with the highest inflation increases in decades, yet the president has done NOTHING to stop skyrocketing prices,” Sen. Rick Scott (R-FL) said in a statement.
“Instead of taking care of the issues that are hurting hardworking families, Biden and his Democrat underlings in Congress are 100% focused on their radical plan to federalize elections. It’s shameful just how far Joe Biden will go to put the Democrats’ political power grab over the needs of the American people,” Scott added.