Price increases significantly moderated in the second half of 2022
For the first time since the COVID-19 pandemic began, the monthly US Consumer Price Index (CPI) declined in December, capping off a second half of 2022 that saw significant moderation in rising prices.
For the past three months, CPI rose on an annualized basis of less than 2 percent, while core inflation, which excludes volatile food and energy prices, rose 3.1 percent. The Federal Reserve, which sets the cost of borrowing and has been raising interest rates faster than any time in four decades, has a target of 2 percent annual inflation.
Fortunately for Maine families, items driving a large portion of the price moderation include energy, food, and cars, which figure significantly in household budgets. Gasoline prices declined 9.4 percent in December, the fifth time in the past six months it had declined. The cost of groceries rose just 0.2 percent in December, a notable moderation after rising a full percentage point in each of the first six months in 2022. And for the first time since January 2021, the price of new vehicles declined in December. The price of used cars and trucks declined 8.8 percent in 2022.
While this is welcome news to working families, prices overall remain much higher than they were a year or two ago and more work remains to improve economic security for Mainers. In June, Maine Center for Economic Policy released a report, Feeling the Pinch, outlining the role of corporate power in rising prices and measures lawmakers can take to ameliorate the impacts of inflation. In 2023, Maine’s elected officials can tax excess profits, reinforce food and energy assistance programs, invest in child care subsidies and worker wages, and increase the supply of affordable housing. Doing so would help all Maine residents thrive this year and beyond.