The consumer price index, the top measure for consumer inflation in the U.S., increased in December to 2.9% in the 12-month period ending last month, according to the Bureau of Labor Statistics, which released the updated consumer price index on Wednesday.
December marked the third consecutive month the consumer price index rose, after dipping to an annualized rate of 2.4% in September.
But 2024 as a whole had lower inflation than previous years. 2023 ended with an inflation rate of 3.4%, while 2022 had an inflation rate of 6.5% and 2021 had an inflation rate of 7%.
RELATED STORY | Biden to promote the US' post-COVID economic recovery in farewell speech
In the last decade, prices generally increased at a rate of 3.2% per year. In the last 20 years, consumer inflation has generally increased by 3% annually. But the Federal Reserve has aimed to keep annual inflation right at 2%.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily. Overall, the price of goods and services increased 0.4% during December.
The bump in the U.S. inflation could cause the Federal Reserve to pause any future decreases in interest rates.
Items with biggest price increases
2024 was a particularly expensive year for transportation, which as a whole increased 7.3%. Motor vehicle insurance was a huge culprit as prices jumped 11.3%. The cost of repairing a vehicle increased 6.2%.
Shelter costs also increased 4.6% in 2024 due to rising rents and mortgages.
RELATED STORY | US unemployment claims fall to 211,000, the lowest level since March
Food prices were closer to the Fed's goal of 2% inflation in 2024, but eggs were nearly 37% more expensive in 2024. The price jump is largely blamed on the avian flu, which has reduced the supply of eggs in the U.S.
Items that saw price decreases
Some products actually were cheaper at the end of 2024 than a year earlier. Among them, fuel oil, motor oil and gasoline, according to the latest consumer price index.
Also, some commodities, such as new and used cars, furniture and appliances all finished 2024 at a lower cost.
Are wages keeping up with inflation?
Wages slightly outpaced inflation, meaning the typical American gained back some of the buying power lost in 2021 and 2022.
U.S. workers were making 3.9% more per hour at the end of 2024 than at the end of 2023. Workers were also earning 3.6% more per week at the end of the year compared to a year prior.
