December Consumer Prices

The busiest shopping month of the year was kind to consumers from a price perspective according to the Bureau of Labor Statistics’ latest report on consumer inflation.  Overall, the index was unchanged from November, and the year-over-year change slipped to 3.0 percent from 3.4 percent the month before; this extends the declining year-over-year price trend that began after September’s peak.  Core inflation only managed to tick up 0.1 percent in the last 31 days of the year.  The core’s year-over-year number remained the same as in November.

When comparing calendar years, this was the highest rate of overall price increases since 2007 and is double the 1.5 percent change in 2010.  Food was the story of the headline number in 2011 as the food index grew 4.7 percent and all six of the grocery store food group indexes increased.  The core number also tallied the highest rate of change since 2007. It was up 2.2 percent after an historically low gain of 0.8 percent in 2010.

Inflation pressures seem to be moderating at this time.  The core rate was flat last month and the rate of change slowed in the last four months of the year after a quicker pace started 2011. There are many pressures and headwinds in the world economy that may mitigate future increases.  Of course, the other side of the argument is that there are several influences that will support a faster pace of price acceleration.  At Atlas, we believe the former explanation in the long run, but we will not deny the possibility of the latter in a shorter time frame.  (by C. Cox)