The American Institute for Economic Research’s Everyday Price Index (EPI), calculated and published monthly, rose 0.12 percent to 288.3 in December 2024. This is the first rise in the index after five consecutive months of declines beginning in July 2024. For the year ending in December, the EPI rose 1.8 percent.
AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)
(Source: Bloomberg Finance, LP)
Among the twenty-four EPI constituents, seventeen rose, five declined, and two were unchanged from the prior month. The largest price gains from November to December 2024 took place in cable satellite and live streaming services, housing fuels and utilities, and fees for lessons and instructions. The largest declines occurred in the prices of motor fuels, personal care products, and pet products.
On January 15, 2025, the US Bureau of Labor Statistics (BLS) released its December 2024 Consumer Price Index (CPI) data. The month-to-month headline CPI number rose by 0.4 percent, which met surveyed expectations. The core month-to-month CPI number increased by 0.2 percent, less than the forecast 0.3 percent rise.
Food prices rose 0.3 percent in December, slightly down from November’s 0.4 percent increase, with grocery prices also up 0.3 percent. Among major grocery categories, cereals and bakery products climbed 1.2 percent, reversing November’s 1.1 percent drop, while meats, poultry, fish, and eggs increased 0.6 percent, driven by a 3.2 percent spike in egg prices. Dairy products edged up 0.2 percent, while nonalcoholic beverages and fruits and vegetables declined by 0.4 percent and 0.1 percent, respectively. The cost of dining out rose 0.3 percent, matching November’s increase, with limited-service meals up 0.4 percent and full-service meals up 0.2 percent.
Energy prices surged 2.6 percent in December after a modest 0.2 percent rise in November. Gasoline prices jumped 4.4 percent, while natural gas and electricity costs increased by 2.4 percent and 0.3 percent, respectively.
Excluding food and energy, prices rose 0.2 percent, slightly less than the 0.3 percent seen in previous months. Shelter costs, including rent and owners’ equivalent rent, rose 0.3 percent, while lodging away from home dropped 1.0 percent following a sharp 3.2 percent increase in November. Medical care costs edged up 0.1 percent, with slight increases in physician and hospital services, while prescription drug prices remained flat.
December 2024 US CPI headline & core month-over-month (2014 – present)
(Source: Bloomberg Finance, LP)
On the year-over-year side, headline CPI rose 2.9 percent, meeting forecasts for a 2.9 percent rise. Year-over-year core CPI rose less than anticipated, with the December 2023 to December 2024 rise coming in at 3.2 percent versus the forecast 3.3 percent.
December 2024 US CPI headline & core year-over-year (2014 – present)
(Source: Bloomberg Finance, LP)
The food at home index rose 1.8 percent over the past year, with notable increases in meats, poultry, fish, and eggs (4.2 percent) and nonalcoholic beverages (2.3 percent). Dairy products rose 1.3 percent, fruits and vegetables 1.0 percent, and cereals and bakery products 0.8 percent. Food away from home increased 3.6 percent, with limited-service and full-service meals up 3.7 percent and 3.6 percent, respectively.
Energy prices dropped 0.5 percent over the December 2023 to December 2024 period, driven by declines in gasoline (-3.4 percent) and fuel oil (-13.1 percent), while electricity rose 2.8 percent and natural gas 4.9 percent.
The index for all items less food and energy rose 3.2 percent, with shelter up 4.6 percent, its smallest annual increase since early 2022. Motor vehicle insurance saw a sharp 11.3 percent rise (and much more, in certain states), while education increased 4.0 percent and medical care 2.8 percent. Other notable changes included a 3.9 percent increase in airline fares alongside smaller gains in recreation and apparel. Personal care and communication indexes declined slightly, with household furnishing prices remaining unchanged.
The December Consumer Price Index (CPI) showed a slower-than-expected rise in U.S. consumer prices, offering relief to financial markets and fueling speculation that the Federal Reserve may return to cutting interest rates sooner than anticipated. Core CPI, which excludes the volatile food and energy components, increased by 0.2 percent following four consecutive months of 0.3 percent gains. That deceleration, the first in six months, was driven by moderating costs in areas such as hotel accommodations, medical care, and rent. Yet while this marks progress in taming inflation, Fed officials are likely to require more subdued readings before reassessing their monetary policy stance.
Yesterday’s Producer Price Index (PPI) release, however, presented a more mixed picture. Certain components that heavily influence the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) deflator, showed signs of persistent price pressures. Of particular note, transportation costs within the PPI rose significantly, reflecting increased tariff-related order adjustments and vindicating the assertion that tariff threats as a “negotiating tactic” nevertheless bring real economic costs. Those factors could contribute to firmness in core inflation measures in the months ahead, adding complexity to the macroeconomic narrative.
Despite these nuances, the softer core CPI reading in December keeps the disinflation narrative alive. Combined with the PPI data, it suggests that the upcoming PCE deflator, due for release on January 31, may show continued progress toward the Fed’s 2 percent inflation target. But with lingering uncertainties in key areas like housing and energy markets, the Fed is likely to stick with its cautious, data-driven approach at its January 28 – 29 meeting, focusing on sustained progress toward price stability.