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Home » News » News » Economy: BLS Says CPI Down 0.1% in Dec., Food Prices Up
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Economy: BLS Says CPI Down 0.1% in Dec., Food Prices Up

Steve RobinsonBy Steve RobinsonJanuary 12, 2023Updated:January 12, 20231 Comment3 Mins Read
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The Bureau of Labor Standards on Wednesday released inflation numbers for the month of December, and while some trumpeted the top line numbers — inflation only increased by 0.1 percent in December — decreases in gas prices hid increases in prices elsewhere in the economy.

From BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis, after increasing 0.1 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.5 percent before seasonal adjustment.

The index for gasoline was by far the largest contributor to the monthly all items decrease, more than offsetting increases in shelter indexes. The food index increased 0.3 percent over the month with the food at home index rising 0.2 percent. The energy index decreased 4.5 percent over the month as the gasoline index declined; other major energy component indexes increased over the month.

The index for all items less food and energy rose 0.3 percent in December, after rising 0.2 percent in November. Indexes which increased in December include the shelter, household furnishings and operations, motor vehicle insurance, recreation, and apparel indexes. The indexes for used cars and trucks, and airline fares were among those that decreased over the month.

The all items index increased 6.5 percent for the 12 months ending December; this was the smallest 12-month increase since the period ending October 2021. The all items less food and energy index rose 5.7 percent over the last 12 months. The energy index increased 7.3 percent for the 12 months ending December, and the food index increased 10.4 percent over the last year; all of these increases were smaller than for the 12-month period ending November. 

Over the last 12 months, food prices have skyrocketed 10.4 percent, energy prices are up 7.3 percent, and the shelter index is up 7.5 percent. The one area where prices have been tamed is used cars, which have decreased 8.8 percent year-over-year, but that may be a sobering up in markets from Pandemic Era spikes in prices.

Those looking for good news in the economic data have also pointed to the low U.S. unemployment rate, but that rate only makes sense in the context of the high workforce participation rate.

Taken together, those indicators suggest the Biden administration may be declaring a false victory when claiming the low unemployment rate measured by BLS is a sign of a vigorous economy. In other words, the unemployment is low, in part, because so many Americans have dropped out of the labor force altogether, and not just because plenty so many Americans have jobs.

Real average earnings have also lagged far behind increases in inflation and decreases in the value of the U.S. Dollar. As the dollar has diminished in value, meaning an average hourly workers take home pay buys less than it used to, wages have not seen commensurate increases.

That inflation effect applies to both earnings and savings, and the loss of value to workers and savers functions like a hidden tax, with value being extracted from wages and savings accounts for appropriation through federal spending.

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Steve Robinson is the Editor-in-Chief of The Maine Wire. ‪He can be reached by email at Robinson@TheMaineWire.com.

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