The consumer price index, which is the basic indicator of inflation for all consumer goods, increased 0.1% in November. This increase marks the fifth consecutive month consumer prices have risen, according to a consumer report [.pdf] released today from the Labor Department. Prices of airline fares increased more than the price of any other good in November with a 3.0% increase. This is the greatest rise in airline fares in over 2 years. Other notable price increases also occurred in the energy sector.
Prices of electrical services and energy commodities both increased in November, 0.9% and 0.8%, respectively. Gasoline prices also increased 0.7%, which marks the fifth consecutive increase in gas. Though, these increases within the energy sector were mostly offset with a sharp decline in the price of natural gas at 5.7%. Prices of the energy sector as a whole went up 0.2% in November, which is the fifth straight increase, albeit the smallest increase of the past 5 months.
This consistent price increase in the energy sector is also visible through the average cost for a gallon of gas. For the first time since October 2008, the average cost for a gallon of gas was over $3.00 in the first week of December, according to the US Energy Administration, as well as the second week of December. In other words, the current price of gas is higher than any of the past 134 weeks. Further, the current gas price is the highest gas price throughout President Obama’s administration.
As discussed in the past, prices of energy are not only going up for consumers, but also for producers. In fact, the cost to produce energy rose for the fourth consecutive month in November with an increase of 2.8%, according to the Producer Price Index [.pdf] released earlier this week. Therefore, prices of energy for consumers have risen 5 straight months, while the cost to produce energy has risen 4 straight months. This correlation is more than a coincidence, this correlation is a trend of higher costs for energy. Moreover, price increases for energy have become the expected outcome, rather than an improved or even stable outcome.
Since last November, the consumer price for gasoline has increased 7.3% and the energy sector as a whole has increased 3.9%. With the clear pattern of recent price increases, December statistics will likely bring similar results, as already reflected in the gas prices during the first 2 weeks of December.