Inflation Modest in December, But, Up Considerably in 2007
The Labor Department reported that consumer prices rose
0.3% in December, down from 0.8% in November, as food costs
were flat for the month and energy prices grew by 0.9%. Core
inflation, which excludes food and energy, was up a more
moderate 0.2% in December. However, the fairly tame
inflationary picture for the last month of the year was
overshadowed by the fact that inflation was up by the
largest amount in 17 years in 2007. Consumer prices rose by
4.1% for all of 2007, up sharply from a 2.5% increase in
2006, largely because prices for both energy and food
soared. Energy costs jumped 17.4% this past year while food
costs increased 4.9%. Both were the biggest increases since
1990. Gasoline prices were up 29.6%, the biggest increase
since they jumped 30.1% in 1999. Outside energy and food,
core inflation grew a more modest 2.2% in 2007.
Meanwhile, producer prices declined 0.1% in December, the
Labor Department reported, reflected lower costs during the
month for gasoline and other energy products. It was a
significant slowdown after prices shot up 3.2% in November.
But, for all of 2007, producer prices grew by the largest
amount in 26 years. Wholesale inflation increased 6.3% for
all of 2007, reflecting an 18.4% surge in energy prices.
That was up from a modest 1.1% increase in 2006, when energy
prices fell 2%.
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