A couple of months ago discussion of inflation seemed like a talking point for executives more than anything else.
Company managers, pundits, the Federal Reserve and the average American consumer disagreed sharply about just how expensive day-to-day life really felt.
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Now, however, we all seem able to agree on at least one thing: The prices of goods and services are generally up.
The most recent Consumer Price Index for December is out, indicating prices rose for a host of goods and services by 0.4%. This pins the 12-month inflation rate at 2.9% — the upper end of analyst forecasts. Most had foreseen the report coming in at 0.3% to 2.9%.
Here’s a look at how some of our core materials and services changed in December compared with the previous month:
Food: up 0.3%Energy: up 2.6%Gasoline: up 4.4%New cars: up 0.5%Used cars: up 1.2%Apparel: up 0.1%Shelter: up 0.3%Transportation: up 0.5%Medical care: up 0.2%Medical Care Commodities: 0.0%
Every metric was up from November 2024, except for medical care commodities, which held steady.
It doesn’t matter where consumers are shopping this year. Whether it’s at expensive, specialty stores for high-quality food or clothing or at a big-box discounter like Walmart (WMT) or Costco (COST) , the price of nearly everything is up.
People shop in a Target.
Image source: Justin Sullivan/Getty Images
Core consumer staples are pricier
If a tick of a couple of percentage points higher doesn’t seem like a big deal, try visiting your local grocery store and looking at some of the essentials.
Things like food are noticeably more expensive than they were just one year ago, when inflation was considered stubbornly high and difficult to tame.
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“The index for food at home rose 1.8% over the last 12 months,” the CPI report found.
“The meats, poultry, fish, and eggs index rose 4.2% over the last 12 months and the nonalcoholic beverages index increased 2.3%. Over the same period, the index for other food at home rose 0.8% and the index for fruits and vegetables increased 1%. The dairy and related products index increased 1.3% over the year and the cereals and bakery products index rose 0.8% over the same period.”
Target highlights a key consumer trend
Naturally, many shoppers are looking for deals. This may seem harder to do, since prices are up, but many big-box retailers are keeping prices down in an effort to bring in customers.
Target (TGT) holiday sales increased 2.8% during the last two months compared with the year-earlier period. Comparable-store sales, those from stores operating for at least a year, were up 2%. Traffic increased both online and in stores, by 3%. Digital sales were up 9% from a year earlier.
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Both its Black Friday and Cyber Monday deals resulted in record sales for the chain, but Target interestingly declined to raise its profit outlook, indicating that its blowout season of deals may not meaningfully lift the bottom line.
Since its metric remains flat despite a bumper holiday season, this figure might be a worrying harbinger for other big-box retailers, like Walmart and Costco, which thrive on rock-bottom prices to attract more customers.
Costco is a slightly different situation, since it charges customers a recurring membership fee, which bolsters its bottom line. And it’s difficult to beat Walmart — the No. 1 retailer and grocer in America — partly because its prices are often unbeatable.
“The consumer was being very intentional,” Target Chief Operating Officer Rick Gomez said of Target’s holiday season, indicating customers spent big during its big week of deals but muted their buying habits on both sides of Target’s Circle Week.
Consumers are “working on a budget,” he added.
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