Prices continued to fall in December as inflation shows more signs of waning.
Consumer prices rose by 6.5% in December compared to last year, according to a Thursday report from the U.S. Bureau of Labor Statistics. This marks the smallest 12-month increase since the period ending in October 2021 and a slowdown from November’s 7.1% and October’s 7.7% year over year growth. Compared to November 2022, prices in December were down 0.1%.
Excluding volatile food and energy costs, the Core CPI rose 0.3% from November and 5.7% from the same month in 2021.
Despite the month-over-month drop, prices are still significantly up compared to last year. Compared to 2020, prices are up 13.9%.
“Ultimately, this represents a serious erosion in the spending power of average households,” said GlobalData managing director Neil Saunders in a statement.
Footwear retail price increases also slowed in December, and were up 0.8% compared to last December, the slowest growth in 21 months. Compared to last year, men’s footwear was up 0.5%, women’s was up 0.1% and kid’s was up 2.9%.
According to the Footwear Distributors and Retailers of America, full-year footwear prices rose 4.6% in 2022, confirming the group’s prediction that footwear prices would grow in 2022 at the fastest rate in four decades. FDRA says it expects prices to continue to fall throughout 2023 as inventory exceeds demand in the footwear market.
The average landed cost of footwear imports rose again in November for the eighth straight month, which has kept contributed to footwear price increases.
Online prices in December also slowed, dropping 1.6% year over year, according to recent data from Adobe. This marked the fourth consecutive month of online price decreases over last year. December’s drop in online prices was largely driven by holiday discounts in categories like electronics, toys, computers and sporting goods.
As inflation persists, the job market has stayed tight as wages increase across various industries. Meanwhile, in an effort to curb spending and rising prices, the Federal Reserve has implemented a series of interest rate hikes in recent months. In December, it raised rates another half a percentage point, marking the highest level in 15 years. While these rate hikes are aiming to ease spending and cool inflation, they could potentially increase the chances of a recession in 2023 as well, the National Retail Federation’s chief economist Jack Kleinhenz said in a recent report.