‘Twas the CPI before Christmas, when all through the nation, not a price was falling, not even utilities or public transportation. The indexes were measured by the BLS with care, in hopes that disinflation soon would be there.
On Tuesday, the Bureau of Labor Statistics released the consumer price index for November (albeit with less rhyming), showing a 0.1% increase in prices from the prior month and a 7.1% rise over the last 12 months. The rising price for shelter was the largest contributor to the monthly increase, more than offsetting falling energy prices. Nonetheless, this release is an early Christmas present to consumers, coming in below economists’ estimates of a 0.3% month-over-month increase and a 7.3% annual jump in prices.
Despite slowing inflation, Christmas is coming with a higher price tag than it did last year, and many are bracing for Santa’s belt-tightening. The latest consumer price index report will undoubtedly inform the Federal Reserve’s impending interest rate hike, but it also might help inform your Christmas shopping plans. So, what Christmas spending categories will make the public want to spike their eggnog this year?
If you are considering flying this holiday season, you might just want to look into where you can get a flying sleigh pulled by magic reindeer. Despite a 3% decline in November, airline fares are still 36% higher than they were this time last year. You could consider driving, but with gas prices still up 10.1% from last year, you may have an excuse to enjoy a cozy Christmas at home.
When considering presents, you should put electronics and appliances at the top of your shopping list. Compared to this time last year, the prices of televisions are down 17%, smartphones are down 23.4%, and major appliances are down 1%. If you were planning on purchasing a car or truck for Christmas, just make sure it isn’t one of the car-commercial-style new ones with a red bow on it. While used cars and trucks are down 3.3% from last year, new cars and trucks are up 7.2%.
As you plan Christmas dinner, you might consider going out instead of cooking at home. The cost of food at home has increased 12%, while the index for food away from home has gone up 8.5% this past year. If you do decide to cook at home, consider substituting beef roast (-8.1%) for the traditional Christmas ham (+7.8%). If you are inclined to have a boozier sort of Christmas cheer, make sure you go for the hard stuff: Distilled spirits only rose 1.7%, while wine and beer jumped 7.9% and 6.6%, respectively.
Finally, when that fateful night before Christmas does roll around, it might be best to assume that Santa is lactose and gluten intolerant because that glass of milk will cost you 14.7% more and that plate of cookies 19.2% more than they did last Christmas.
The latest consumer price index numbers are certainly a reason to hope for easing inflation in the new year, but for now, they are a reminder that this Christmas is going to cost the public more than it did last year. At least spiking your eggnog will be relatively cheap, and time with family and friends is always free.
Michael Schultz is an economist in the Washington, D.C., area.