Real Wages Fall for the Twenty-First Month as Rent and Food Prices Keep Rising

The federal government’s Bureau of Labor Statistics (BLS) released new price inflation data today, and according to the report, price inflation during the month decelerated slightly, coming in at the lowest year-over-year increase in fifteen months. According to the BLS, Consumer Price Index (CPI) inflation rose 6.5 percent year over year during December, before seasonal adjustment. That’s the twenty-second month in a row of inflation above the Fed’s arbitrary 2-percent inflation target, and it’s fifteen months in a row of price inflation above 6.0 percent.

Month-over-month inflation fell for the first time in five months, with the CPI falling 0.1 percent from November to December.

December’s year-over-year growth rate is down from June’s high of 9.1 percent, which was the highest price inflation rate since 1981. But December’s growth rate still keeps price inflation above growth rates seen in any month during the 1990s, 2000s, or 2010s. December’s increase was the fourteenth-largest increase in forty years.

The ongoing price increases largely reflect price growth in food, energy, transportation, and shelter. Gasoline and used car prices, on the other hand, fell and mitigated the overall CPI increase. Nevertheless, the prices of essentials overall saw big increases in December over the previous year.

For example, “food at home”—i.e., grocery bills—was up 10.4 percent in December over the previous year. Energy services were up 15.6 percent. Shelter was up by 7.5 percent.

As of December there is, as of yet, no sign of price growth in shelter slowing down. Last month, shelter prices increased by 7.1 percent, and YoY growth only continued into December having now reached the highest growth rate since July of 1982. Month-over-month growth in shelter costs also remains among the largest we’ve seen in 40 years. In the seasonally adjusted numbers, shelter prices rose 0.8 percent, the highest since June 1982: 

Meanwhile, so-called core inflation—CPI growth minus food and energy—has barely fallen from the forty-year high reached in September. In December, year-over-year growth in core inflation was 5.7 percent. That’s down slightly from November’s growth rate of 5.9 percent. September’s year-over-year increase of 6.7 percent was the largest recorded since August 1982. Month-over-month growth in this measure was pos