The latest data on the Consumer Price Index (CPI) for December 2023, released today, indicates a 3.4% year-over-year increase, up from 3.1% in November. The acceleration in the CPI was primarily driven by higher year-over-year prices for gasoline, airfares, fuel oil, passenger vehicles, and rent.
Gasoline prices experienced a 1.4% increase in December, rebounding from a 7.7% decline in November. This surge is attributed to a base-year effect, where gasoline prices fell more sharply in December 2022 than in December 2023. On a monthly basis, however, gasoline prices fell for the fourth consecutive month, dropping by 4.4% in December. Ongoing uncertainties in oil demand and ample supply levels contributed to this decline.
The cost of air transportation witnessed a substantial 31.1% month-over-month increase in December, fueled by strong demand during the holiday season. Despite this surge, the year-over-year increase was less pronounced at 9.7%, compared to November’s 17.4% decrease. This uptick in air transportation costs played a role in pushing the all-items CPI higher.
Rent prices continued their upward trajectory, rising by 7.7% year over year in December, up from a 7.4% increase in November. Contributing factors include a higher interest rate environment, creating barriers to homeownership. Notably, provinces such as Ontario, British Columbia, and Quebec played a significant role in driving the overall increase.
The purchase of passenger vehicles saw a 2.3% year-over-year increase in December, following a 1.5% rise in November. This uptick was led by higher prices for new passenger vehicles, particularly those from the 2024 model year.
Food purchased from stores exhibited a 4.7% year-over-year increase in December, mirroring the increase seen in November. This stability in food prices contrasts with the fluctuations observed in other sectors.
On a monthly basis, the CPI experienced a 0.3% decline in December, following a 0.1% gain in November. This decrease was influenced by lower prices for travel tours (-18.2%) and gasoline (-4.4%). Adjusted for seasonality, the CPI rose by 0.3% in December.
The overall picture suggests a mixed economic landscape, with certain sectors contributing to inflationary pressures while others experience declines. As the new year unfolds, monitoring these trends will be crucial for understanding the broader economic implications.