Going to turn to the price you pay
and compared to November, overall
prices were actually lower last month.
That is the big headline that came out
of today's consumer Price Index report,
which tracks inflation.
The December number is still high
year over year, prices up 6 1/2%,
but it was the first time that we saw that
decline month to month since April of 2020.
And the big question is,
will this trend continue and get overall
inflation into a better place for
families who are still feeling the pinch?
Let's get some insight now
live with Greg McBride.
He is chief financial analyst
with bankrate.com. Greg,
it's always great to have you on the show.
We appreciate you coming back.
And I wonder just first kind
of your overall reaction here.
Again,
oftentimes when we talk about inflation,
we look year to year and that #6 1/2%,
you know,
it's not double digits like we were seeing,
but it's still high.
But when you look month to month,
we saw that very slight decline.
What to make of that?
Things are moving in the right direction,
Michael, but we still have a long way to go.
You know, As for the month to month
decline that we saw this month,
I wouldn't put too much stock in
that because a lot of that was
influenced by a 9% decline in
gasoline prices during December.
Well, we're not going to see a 9%
decline in gasoline prices every month.
That really masked some increases
that are still in the report.
And those are in categories that are
really squeezing household budgets.
Those are the areas where we
need to see improvement before we
can really feel like inflation.
Getting under control,
yeah. And just to dig into that a little bit,
when you talk about those numbers
that are still higher than where
you want them to be, I mean,
food obviously comes to mind.
Again, not as bad as it was
maybe a few months ago,
but whether you're talking about food at
the grocery store or going out to eat,
both of those numbers remained pretty high.
Yeah, food for sure.
But even electricity, natural gas,
motor vehicle insurance,
apparel type of things people
are buying every month,
even household supplies,
things like household paper goods,
all those monthly expenses that you make,
those are all still up and
up at a pretty rapid clip.
So you know at first glance it looks good,
but when we dig a little bit deeper,
there are still a couple
of red flags in there.
So Greg, I believe a lot of
analysts yourself may be included,
would like to see that inflation number.
Year to year, somewhere around 2%.
We were at 6 1/2%.
So we've still got a long
way to go to get to that.
I mean, how long of a track
are we talking about there in
order to get back to something
that's a little more reasonable?
You know, that's the real question now.
You know the expectations of it and
it's going to come down over the course
of the next year or so and that we're
going to get back to that 2% mark.
And that may well happen.
But my concern is, you know,
a lot of like losing weight for
the first £10 comes off a lot
easier than the next 10 pounds.
You know, we, we've seen some
some substantive improvement,
but there is the risk that we
don't see the improvement in those
other categories and all of a
sudden the improvement slows down.
We get stuck in the safe 4 1/2 or
5% neighborhood with inflation.
And then you know,
we still got a ways to go and we're
still dealing with high inflation.
Obviously the goal of the Fed and
and really what everybody would
like to see is to get inflation
down without sending us into a
recession because interest rates
keep going up and keep going up.
There is likely I guess to
be another rate hike.
I mean how do you see this impacting that
for people who are watching right now,
if you have credit card debt and they,
you know, keep increasing interest rates,
you're paying more on that.
Yeah. I'm glad you brought this up,
Michael, because I can't emphasize
strongly enough the urgency of paying down
and paying off that credit card debt.
Credit card rates are already at record
highs and they're going to continue to
increase because the Federal Reserve
is not done raising interest rates.
So in particular, look for a 0% or
other low rate balance transfer offer,
so you can really turbocharge
those debt repayment efforts.
What are the biggest troubling
signs for you in this report, Greg?
I know that you talked about it sort of
masked a little bit by the big decline.
We saw in energy prices,
but you know things like rent
and and home prices and stuff.
I think in the past you told us those
are what you call sticky because
they tend to take a long time to get
them back to a reasonable place.
I mean are we seeing any signs
that some of those parts of this
report are improving at
all? Well, the readings on housing related,
you know, like rent, it lags a bit.
So you know there's a big increases that
people were experiencing when they renewed
their leases over the past couple of years.
That takes a while to really show
up fully in the report and we're
seeing that now even though prices
themselves may have moderated a bit.
The what bothers me about the report is that
if we're going to really get closer to 2%,
we need to see broad based improvement
on the inflation front across
a range of goods and services.
And there are still a lot of
categories that people incur those
expenses every single month that
are still going up at a rapid pace.
So, you know, a lot of viewers
probably sitting at home saying,
hey, I'm not feeling a whole
lot of relief in my budget.
You're right, you're probably not.
I think, you know,
those are the areas where we've got
to see substantive improvement before
we can really start talking about it.
We
talked about egg prices yesterday
here on the show. Once again,
egg prices up in this inflation report,
though not as much as as we've
seen a little bit in the past.
Greg McBride is chief financial
analyst for bankrate.com.
Rick, always great to get your insight.
This affects everybody watching.
So thank you very much.
Thank you, Michael.