Rising energy costs are pushing inflation back up. Ways you can save this winter

On By Littum

Inflation crept up again in December, driven primarily by a jump in energy prices, according to the latest Consumer Price Index Report. If you’re waiting for relief from high interest rates, you’ll have to wait a little longer.

The report showed prices rose by an annualized 2.9% in December, as most experts expected. Core inflation, which excludes food and energy categories, rose 3.2% year-on-year, slightly less than expected.

A sharp increase in energy prices, which had been falling for most of 2024, accounted for 40% of the increase in inflation, the Bureau of Labor Statistics said in its report. The gas index rose 4.4% month over month compared to November’s 0.6% increase. Piped gas also rose 2.4% for the month.

What it means for this month’s Fed meeting

The Federal Reserve meets at the end of the month, and experts expect the central bank to keep interest rates steady. As inflation picked up last quarter and the labor market remained strong – the unemployment rate fell back to 4.1% in December, according to latest job report — It looks increasingly unlikely that the Fed will cut interest rates anytime soon.

Economist Robert Fry says he doesn’t expect the Fed to make another rate cut before the end of this year.

“I think the Fed needs at least a month, probably more, with the core PCE price index rising less than 0.2% to justify a rate cut,” he said in an email.

How to combat high energy prices at home

Several factors contributed to the increase in energy prices in December, including cold temperatures in large parts of the country as well as continued geopolitical unrest. If you find your energy bill rising amid the latest bout of cold weather, there are steps you can take to combat rising prices, including the following:

  • Set your thermostat to a lower temperature and lower it a few degrees more when you go to bed. You can use a smart thermostat to set up a schedule so you don’t have to remember to adjust the temperature every night.
  • Use weather stripping to seal drafty windows and cracks around your doors.
  • Use one space heater only to heat the rooms you use. Just make sure you plug it directly into the wall.

While these changes may not completely offset price increases, they can help lower your monthly costs.

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