The cost of living in the US rose less than expected in December, according to a Labor Department report released Friday. However, inflation picked up in the past year as a result of higher energy prices.
Consumer prices inched 0.1 percent higher in December after rising 0.4 percent in November. The reading was the lowest since July 2009, and was 0.1 percent lower than most forecasts.
The government reported that US inflation increased 2.7 percent in 2009 — the largest rise since 2007. By comparison, 2008 Inflation came in at 0.1 percent. Higher gasoline prices contributed greatly to the difference.
"The larger increase was primarily due to the energy index, which rose 18.2 percent during 2009 after falling 21.3 percent in 2008. The energy upturn was caused by the gasoline index, which rose 53.5 percent in 2009 after declining 43.1 percent in 2008," the Labor Department’s report stated.
Excluding volatile food and energy costs, the so called core CPI also rose 0.1 percent in December to meet expectations. Core inflation rose 1.8% over the past 12 months after increasing 1.7% in November. The number is within the Federal Reserve’s comfort range of 1-2 percent.
Gold is often purchased as a hedge against inflation. December’s tame inflation reading was one of the factors cited for the yellow metal’s retreat on Friday. New York gold futures for February delivery ended down $12.50, or 1.1 percent, to $1,130.50 an ounce.
Consumer prices in December
Several price figures for the month follow:
- Used car and truck prices rose 2.5% compared to a 2.0% increase during the month prior
- Energy prices increased 0.2% after soaring 4.1% in November
- Gasoline prices advanced 0.2% after jumping 6.4% in the month prior
- Fuel oil prices climbed 1.1% following a surge of 9.0%.
- Food prices moved up 0.2%. They were up 0.1% in November.
- Airfares increased for the sixth consecutive month, rising 2.4%
- New vehicles prices declined 0.3% after a 0.6% rise in November
- Natural gas prices plummeted 18.1% after rising 1.5% during the prior month
U.S. Inflation Calculator Update
Using the most recent Consumer Price Index data, the CoinNews Inflation Calculator shows how consumer prices have changed over the years. By entering any two dates from 1913-2009 and then a dollar amount, the calculator measures the buying power of the dollar over time. Inflation over the years can be seen with these few calculator examples:
- An item purchased in 1913 for $1 would now cost $21.67 (18 cents less than the prior month)
- An item purchased in 1950 for $10 would now cost $89.702 (74 cents less than the prior month)
- An item purchased for $20 in 1985 would now cost $39.88 (33 cents more than the prior month)
Mixed dates may also be used with the Inflation Calculator. As examples:
- An item purchased today for $500 would have cost $125.39 in 1975
- An item purchased for $1000 in 1980 would have cost $1,586.17 in 1990
Of course, not all "goods and services" rise or fall in tandem with inflation rates. For example, many computers when adjusted for inflation are actually less expensive today (and do more) compared to years ago.