Consumer Price Index sheds good light on inflation in the Mid-South

MEMPHIS, Tenn. — The prices you pay for everything are cooling. =

New data released by the Labor Department on Jan. 12, show the Consumer Price Index fell slightly from Nov. to Dec. by 0.1%.

That’s not a lot, but it’s the biggest monthly decline since early in the pandemic in May 2020.

And, experts said it’s a sign the inflation tide is changing.

“Certainly we would like prices to fall faster, but it was a good sign that they fell at all,” said economist Dr. John Gnushcke. “And, it’s a sign that perhaps we’re nearing the end of the inflationary cycle.”

Gnuschke said this drop could be the beginning of a downward trend, with lower energy costs leading the way.

The Energy index fell 4.5% in Dec. thanks largely to a 9.4% drop in gas prices from a month before.

“Gas prices have fallen dramatically from where they were at the peak,” said Gnuschke. “We’re looking at $2.50 a gallon gas. That’s 50% of what it was when inflation was at its peak. We’re looking at record low natural gas prices.”

Comparing Dec. 2022 to 2021 inflation rose 6.5%, that’s the sixth straight year-over-year slowdown, but it’s still an increase.

Food prices in Dec. rose 0.3% with the index for eggs going up 11.1%.

“Everyone who shops for groceries knows that prices are going up,”  said Gnuschke. “That’s not a good thing because in a local economy when we have a lot of people who live on the margin, who are in fact in poverty or near poverty, they have to buy groceries. So this is a dilemma for them in particular. Until we see energy prices reflected in lower food prices then in fact we’re going to have an inflationary problem with food.”

Shoppers who spoke with FOX13 on Jan. 12, said that change can’t come soon enough.

“Prices are higher than usual they’ve been up the last year,” said Denise Jones. " With a family of five that makes your budget go up. You have to plan for it a little bit differently. I hope they (prices) drop sooner rather than later.”

“We’re just trying to do what we can to buy things in bulk and make sure that we’re not wasting anything,” added another shopper.  “I would hope in the long run that they do start trending downward, but it’s great to hear that they’re not going up any significant amount.”

Gnuschke said food prices should start to cool, too, as they reflect lower costs elsewhere, such as transportation.

“We should expect it to continue to fall,” said Gnuschke. “It’s only one month’s data and we’ve got multiple months to go. Clearly, it’s going to take a while for this inflation to go away. The inflationary pressure in many of the markets is declining so we should expect it to continue to fall in the rest of ‘23.”

Following the CPI report, market pricing pointed toward an increased probability that the Federal Reserve would approve a 0.25% point rate increase on Feb. 1.

That would represent another step down for the Central Bank after it approved four consecutive 0.75% point hikes last year before slowing down to a 0.5-point increase in Dec.