CPI inflation December 2024:

Prices paid by consumers for a range of goods and services rose again in December, but closed out 2024 with some mildly better news on inflation, particularly on housing.

The consumer price index rose a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%, the Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for 0.3% and 2.9%, respectively.

Excluding food and energy, the annual core CPI rate was 3.2%, down a step from the previous month and slightly better than the 3.3% forecast. The core measure rose 0.2% on a monthly basis, also 0.1 percentage point less than expected.

Much of the increase in CPI came from a 2.6% increase in energy prices for the month, pushed up by a 4.4% increase in gasoline. It was responsible for about 40% of the index’s gain, according to the BLS. Food prices also rose by 0.3% for the month.

On an annual basis, food increased by 2.5% in 2024, while energy decreased by 0.5%.

Prices for shelter, which make up about a third of the CPI weighting, rose 0.3% but were up 4.6% from a year ago, the smallest one-year increase since January 2022.

Stock market futures rose after the announcement, while government bonds fell.

While the numbers compare favorably with forecasts, they still show the Federal Reserve has work to do to reach its 2% inflation target. Headline inflation fell from its 3.3% in 2023, while core inflation was 3.9% a year ago.

Inflation readings this week – the BLS released its Product Price Index on Tuesday – are expected to keep the Fed on hold when it holds its policy meeting later this month.

While the market cheered the CPI release, the news was less positive for workers: Inflation-adjusted earnings for the month fell 0.1%, putting the year-over-year gain at just 1%. The BLS said in a separate release.

The details of the inflation report were otherwise mixed.

Used car and truck prices rose 1.2%, while new vehicle prices also rose 0.5%. Transport services rose 0.5% and rose 7.3% year-on-year, while egg prices rose 3.2%, bringing the annual increase to 36.8%. Motor insurance rose 0.4% and rose 11.3% annually.

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