INFLATION:
November 2024’s monthly Consumer Price Index (CPI) increased by 0.3%, replacing November 2023’s monthly CPI of 0.2%. This change caused the annual CPI to rise from 2.6% to 2.7%. Looking ahead to December 2024, the December 2023 monthly CPI of 0.2% will roll off. If the December 2024 monthly CPI comes in at 0.2%, the annual CPI will remain at 2.7%.
INFLATION Projection:
Over the past 12 months, the average monthly CPI has been 0.2%. If this trend continues, annual inflation could decrease to 2.1% by April 2025. The annual CPI is projected to remain in the 2.6% ± range.
INFLATION Components:
For monthly inflation in November, the leading contributors were Food and Used Cars. For annual CPI, Shelter remains the largest contributing factor.
Total CPI:
The annual CPI is calculated as a rolling product of 12 monthly data points. Picture this as 12 dominoes: as a new month’s data is added, the oldest month falls off. In this case, November 2023’s 0.2% was replaced by November 2024’s 0.3% (blue bar, left axis), causing the annual CPI to increase from 2.6% to 2.7% (red line, right axis).
Key Categories:
FOOD:
The annual CPI for food is 2.4%, with November 2024’s monthly increase at 0.4%, driven by an 8.2% spike in egg prices due to Avian Bird Flu.
Avian Bird Flu continues to spread, with a county in northwest Iowa declared an emergency zone. Grocery stores in the San Francisco Bay Area are limiting egg purchases.
ENERGY:
- Gasoline prices have been declining in recent months, but other energy-related costs, such as fuel heating oil, have risen as winter approaches.
- While gas prices have dropped to $3.00 per gallon, they were up 0.6% in November for CPI calculations.
CORE CPI:
Core CPI, which represents 77% of the overall CPI, includes Shelter as its largest component (32% of all consumer expenditures).
Core CPI showed slight improvement as older monthly data points rolled off. However, further improvements may slow as newer months replace prior data of similar magnitude.
SHELTER:
Shelter makes up nearly one-third of the CPI and is slow to change. Recent months show gradual improvement, which will help reduce this significant CPI component over time.
MEDICAL SERVICES:
Medical services costs, which were a major contributor to CPI improvement in mid-2023, began increasing in late 2023 and have continued to rise into 2024.
NEW CARS:
New car price growth has slowed, aiding overall CPI improvement. However, November 2024 saw the first increase in new car prices in nearly a year.
USED CARS:
Annual used car prices have trended upward for four consecutive months as elevated new car prices have pushed more buyers toward the used car market.
Bill Knudson, Research Analyst LANDCO NEXA