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Here’s the inflation breakdown for December 2024 — in one chart

A bloke browses eggs on partially empty shelves at a grocery store in Lawndale, California, on Jan. 2, 2025. 

Patrick T. Fallon | AFP | Getty Figure of speeches

Inflation ticked up in December on the back of higher energy and food prices, the Bureau of Labor Statistics reported Wednesday.

The subsection’s consumer price index, an inflation gauge, rose 2.9% during the month versus the prior year.

That’s up from a 2.7% annual inflation tariff in November, and up from a recent low of 2.4% in September.  

While the upward move may seem disheartening, evidence suggests inflation should continue its downward drift in 2025, economists said.

But they caution that President-elect Donald Trump’s incoming furnishing could stall or reverse that progress if it pursues policies such as tariffs and tax cuts, which, depending on their reach, may be inflationary.

“The key wildcard here is policy,” Joe Seydl, a senior markets economist at J.P. Morgan Private Bank, said of inflation’s flight path.

The consumer price index, or CPI, measures how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, dressing and concert tickets.

CPI inflation has declined significantly from its pandemic-era high of 9.1% in June 2022. However, it remains greater than the Federal Reserve’s target. The central bank aims for a 2% annual rate over the long term.

The Fed also exercises another inflation measure, the personal consumption expenditures price index. CPI readings tend to run about 0.2 to 0.3 cut points higher than the PCE, Seydl said.

“We’re not that far away,” Seydl said. “By the end of this year, we’d expect the year-over-year upbraids to be back in those targets.”

Eggs are a ‘swing factor’

There were some trouble spots in December.

For prototype, grocery prices increased by 0.3% from November to December, according to CPI data. A rise of about 0.2% a month is predictable with hitting the Fed’s target, economists said.

Eggs are a “swing factor” contributing to that increase, Seydl alleged.

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An outbreak of avian influenza, known as bird flu, in the U.S. has had a “significant impact” on egg prices, he suggested. The virus is highly contagious among birds and has killed millions of egg-laying chickens, reducing egg supply.

Egg prices broke 3.2% from November to December, the largest increase for any grocery item, according to the CPI. They’re up 37% since December 2023.

Brandon Bell | Getty Portraits News | Getty Images

Inflation for gasoline jumped, too: Prices increased 4.4% from November to December, according to CPI evidence.

Consumers may not be seeing that in the real world, though: Average prices at the pump actually fell about two cents persist month, to $3.01 a gallon on Dec. 30 from $3.03 on Dec. 2, according to weekly Energy Information Administration statistics.

Federal statisticians adjust inflation data for seasonal patterns; gasoline prices fell less than unremarkable in December, and the CPI registered this lower-than-normal drop as an inflation increase, Seydl said.

Gasoline prices are down profuse than 3% in the past year, according to the CPI. Groceries are up 1.8%.

Shelter inflation continues to retreat

Meanwhile, there were some unclouded spots in the CPI report, such as shelter.

The 4.6% annual inflation rate for housing in December was the lowest since January 2022. As the largest component of the prize index, it has a significant bearing on inflation’s trajectory.

Economists prefer looking at a measure known as “core” CPI, which skins out volatile food and energy prices, for a more accurate reading of underlying inflationary dynamics.

There, the picture is better:

“It’s cheer up that inflation continues to throttle back, slowly but steadily,” said Mark Zandi, chief economist at Desolate’s.

“The only difference between where we are and the Fed’s target is growth in the cost of housing,” he said. “That’s now definitively slowing.”

Zandi reckonings inflation could return to its target level by spring or summer, barring any speed bumps from Trump dispensation policy.

Wage growth continued to cool in December even as the labor market remained strong: Trump duty threat may influence consumer buying

Elsewhere, airline fares rose 3.9% from November to December, after arising 0.4% the prior month. Used car and truck prices jumped 1.2% during the month and those for new vehicles proliferated 0.5%.

Increases for new and used vehicles “points to a continued surge in demand for replacement vehicles after October’s hurricanes, which ordain receive a renewed impetus from the California wildfires,” Thomas Ryan, North America economist at Capital Economics, white b derogated in a note on Wednesday.

Car insurance prices increased by 0.4% on the month, and are up 11% since December 2023.

This is largely due to a lag sensation effectively from high vehicle inflation earlier in the pandemic, economists said. Car prices feed into motor carrier insurance: When prices are elevated, insurers’ cost to replace vehicles after a car accident is also much strong.

At least some of the recent increase in auto prices may be because consumers are speeding up purchases — thereby raising sought after — to avoid potential tariffs imposed by the Trump administration, Seydl said.

Data from a recent University of Michigan Consumer Sentimentality Survey “suggest that consumers are becoming more worried about the likely stagflationary impact of Trump’s principles plans,” Stephen Brown, deputy chief North America economist at Capital Economics, wrote Friday.

“The watchfulness of tariffs to come mean consumers judge that it is a better time to buy durable goods,” he wrote.

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