Energy prices continued to fall in December year over year, providing relief to Americans struggling to heat their homes and fill their gas tanks.
The energy component of the Consumer Price Index fell 2 percent compared to December 2022, the Labor Department reported Thursday.
But the energy index rose 0.4% on a monthly basis in December, after falling 2.3% in November and 2.5% in October, driven by electricity costs, which rose 1.3% compared to November, and a rise in the gas index. Due to high oil prices. Seasonal adjustments. The increase in the energy index helped drive a slight rise in headline inflation, which reached 0.3% on a monthly basis.
Transportation costs, a prime example of stubborn inflation that prompted the Fed to raise interest rates 11 times in two years, rose 0.2 percent, a modest increase after falling 0.6 percent in November and 0.9 percent in October.
Airline ticket prices rose 1% in December, a busy time for air travel. according to Recent report From the International Air Transport Association, consumers can expect airfares to continue to track rising costs, especially oil.
The decline in energy inflation was driven by weakness in the domestic and global oil market, not Fed policy moves. The price of Brent crude, the international benchmark, was about $79 a barrel on Thursday morning, after approaching $100 last summer amid rising demand and extended production cuts by the world's largest oil producers.
Although the gas price index rose 0.2% in December, a soft oil market and seasonal effects have kept gasoline prices lower since last fall. On Thursday morning, the average price of a gallon of unleaded gasoline was $3.08, 74 cents less than it was on October 1. And about 20 cents cheaper than last year, according to AAA.
Michael Pugliese, chief economist at Wells Fargo, cautioned against reading too much into one report, especially regarding energy prices, which are often volatile. He pointed out that the reduction of increases in energy prices was achieved through a range of energy types, not just gas.
“Clearly, in the mainstream, these prices are not rising as much as they were,” he said.
High gas prices can make headlines and upset elected officials, but diesel costs tend to be more important to overall inflation. Those have eased, too: A gallon of diesel cost $3.94 on Thursday, 7 cents cheaper than it was last month and about 70 cents cheaper than a year ago.
Diesel also powers heavy machinery used in agriculture and transportation. The fuel oil index fell 5.5 percent in December, after a 2.7 percent decline in November.
Mild winters in the Northern Hemisphere also contributed to lower diesel costs. Harsh weather tends to increase demand for diesel. According to data from International Air Transport AssociationThe price of jet fuel in North America fell by 10.4 percent compared to the week ending January 5 of last year, but was slightly higher compared to last month, by 0.7 percent.
“Typical beer advocate. Future teen idol. Unapologetic tv practitioner. Music trailblazer.”