Gasoline prices dropped in December 2022 as food, shelter and medical care costs rose.
The U.S. Bureau of Labor Statistics (BLS) reported on Thursday that annual inflation slowed to 6.5% in December 2022, a sign that the high consumer prices plaguing the nation are easing.
The inflation rate for the prior month of November 2022 was 7.1%.
BLS notes that the largest contributor to the decrease is gasoline which saw a 9.4% drop from November. Overall, the energy sector of the report decreased 4.5% even as electricity costs rose 1%. In the past year, energy prices have risen 7.3%.
However, consumers are still feeling the strain on their wallets when it comes to food and shelter, both of which saw increases for the sixth straight month. Food prices are up 0.3% while shelter, or housing, costs rose 0.8%.
Medical care cost also increased in December, rising 0.1% after a decline in the previous two months.
The historically high rates of inflation over the past year have caused the Federal Reserve to raise interest rates five times over so many months. The Fed raised interest rates 0.75 percentage points four times before its December increase of 0.5 percentage points. These rate increases are aimed at reducing demand in the market which has the effect of reducing inflation over time.
The Fed may consider another interest rate hike following this latest consumer price index report but as they seek to balance the increases with not throwing the U.S. economy into a recession. It is a tightrope act economists are keenly watching.
You can read the full BLS Consumer Price Index report here.
