If you bought fresh fish, gasoline or health insurance last year, you may have noticed that prices were higher than in 2015.
There’s no doubt inflation is on the rise.
Overall, the U.S. Consumer Price Index (CPI) increased 2.1 percent in 2016, according to new data from the U.S. Bureau of Labor Statistics. That’s more than the 0.7 percent rise in 2015 and the 0.8 percent gain in 2014. It’s also higher than the 1.8 percent average annual increase for the last decade.
“Inflation is trending higher, thanks to rising energy prices,” said Lindsey Piegza, chief economist at Stifel Fixed Income. Federal policy makers will the recent increase as “reason enough to justify” raising interest rates further.
Inflation hasn’t reached the Federal Reserve’s 2 percent target, but it’s inching up enough for Fed chairwoman Janet Yellen on Wednesday to say the central bank plans to raise interest rates a few times a year until they near 3 percent at the end of 2019. I wrote more about that in an article on Wednesday.
As consumer spending and demand increases, prices rise, reflecting a stronger economy.
The CPI consists of prices for many different items — some were higher in 2016, and some were lower. Here’s a sampling at certain prices:
The energy price index rose 5.4 percent, after declining in 2015 and 2014. The
gasoline price index increased 9.1 percent, after sharp decreases in the previous two years. The natural gas index rose 7.8 percent, after declining 14.9 percent in 2015.
Other higher prices
The cost of shelter continued to accelerate, with the index up 3.6 percent in 2016 after increasing 3.2 percent in 2015, 2.9 percent in 2014 and 2.5 percent in 2013. The rent index rose 4 percent in 2016, while the index for homeowners increased 3.6 percent.
The medical care index, rose 4.1 percent, the largest annual increase in nine years. Prices for prescription drugs rose 6.2 percent, health insurance increased 5.6 percent and hospital services were up 4.4 percent.
Car and truck rentals rose 10.5 percent. Motor vehicle insurance rose 7 percent in 2016, its largest annual increase in 14 years.
The food price index was down slightly. Prices for groceries fell 2 percent after dipping 0.4 percent in 2015, making it the first time the food at home index declined for two straight years since the 1950s.
Eggs saw the biggest drop (-33.8 percent). Lettuce was down 16.9 percent. Ground beef declined 8.1 percent. Prices rose on other groceries, including fresh seafood and potatoes.
The cost for food away from home — at restaurants, pubs and other places — rose 2.3 percent after increasing 2.6 percent in 2015.
Other lower prices
Television prices fell 24.5 percent. Computer software and accessories fell 11 percent. Toys fell 8.7 percent.
The index for airline fares fell for the fourth straight year, down 4.7 percent. The index for used cars and trucks declined 3.5 percent. Household furnishings were down 1.1 percent.
Prices for new vehicles and clothing were flat.