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A year in review: exploring consumer price trends in 2023

By Casey Carter

Inflation persisted in 2023, albeit at a decelerating rate compared with 2021 and 2022. Over the year, the Consumer Price Index (CPI) grew by the third largest over-the-year rate since 2007. The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.¹ How did the different categories of the CPI contribute to the over-the-year increase in 2023?

This Beyond the Numbers article examines trends for major CPI categories, such as food and beverages, energy, and all items less food and energy, in 2023. The article also highlights subcategories that made notable changes or had some effect on the major categories.

All items index continues to increase

In 2023, the all items Consumer Price Index for All Urban Consumers (CPI-U) increased 3.4 percent.² This December-to-December increase followed an increase of 6.5 percent over the previous year. (See chart 1.) The index has risen at a 2.8-percent average annual rate over the past 10 years.

The shelter index increased 6.2 percent in 2023, which accounted for over 60 percent of the increase in the all items CPI-U. Excluding shelter, the CPI-U increased 1.9 percent. Food and beverage prices increased 2.7 percent, while energy prices decreased 2.0 percent over the year. Excluding food and energy, the CPI-U increased 3.9 percent.

Food and beverages index increases at a decelerating rate

Food and beverage prices increased 2.7 percent in 2023, decelerating from the 10.1-percent increase in 2022. The index has risen at a 3.1-percent average annual rate over the past 10 years.

From December 2022 to December 2023, prices rose in four of the six major grocery store food groups. (See chart 2.) Prices for other food at home (which includes food items not classified in other food categories, such as candy, snacks, and sauces) increased the most between December 2022 and December 2023, rising by 2.8 percent. Cereal and bakery product prices and nonalcoholic beverage and beverage material prices both increased 2.6 percent over the last year, while fruit and vegetable prices rose 0.3 percent. Prices for meats, poultry, fish, and eggs and dairy and related products declined by 0.1 percent and 1.3 percent, respectively.

Prices for food away from home increased 5.2 percent between December 2022 and December 2023. (See chart 3.) Full service meal prices rose 4.5 percent over the same period, and limited service meal prices rose 5.9 percent. Prices for food at home increased 1.3 percent in 2023.

Alcoholic beverage prices increased 2.5 percent over the year, with alcoholic beverages at home and alcoholic beverages away from home rising by 1.2 percent and 4.6 percent, respectively.

Energy index decreases after 2 years of increases

From December 2022 to December 2023, energy prices decreased 2.0 percent. Prior to 2023, energy prices had increased by 7.3 percent in the 12 months ending December 2022 and by 29.3 percent in the 12 months ending December 2021. Over the past 10 years, energy prices have increased at a 1.4-percent average annual rate.

Most energy component prices declined over the past year. (See chart 4.) Natural gas prices declined 13.8 percent over the 12 months ending December 2023, while fuel oil prices decreased 14.7 percent. The only component to rise over the year was electricity prices, which rose 3.3 percent.

Gasoline prices fell 1.9 percent between December 2022 and December 2023, after decreasing 1.5 percent over the previous year.

Index for all items less food and energy increases at a decelerating rate

Excluding food and energy, the CPI-U increased 3.9 percent from December 2022 to December 2023. (See chart 5.) The index for all items less food and energy decelerated from the previous year increase of 5.7 percent. Over the past 10 years, the index for all items less food and energy has increased at a 2.9-percent average annual rate.

Housing and shelter indexes rise at a decelerating rate

The housing price index rose 4.8 percent in 2023, following an 8.1-percent increase in 2022. The shelter component of the housing index increased 6.2 percent over the year, after an increase of 7.5 percent over the previous year. The rise in shelter prices accounted for more than half of the total increase in all items less food and energy.

The rent of primary residence component rose 6.5 percent from December 2022 to December 2023, while owners’ equivalent rent of primary residence prices increased 6.3 percent.

Transportation index increases

Transportation prices increased 2.9 percent from December 2022 to December 2023, following a 3.9-percent increase from December 2021 to December 2022. (See chart 6.) Transportation prices have risen at a 2.1-percent annual average rate over the past 10 years.

Transportation services prices increased 9.7 percent over the 12 months ending December 2023, after rising 14.6 percent over the previous year. Prices for motor vehicle insurance rose 20.3 percent between December 2022 and December 2023, while prices for motor vehicle maintenance and repair rose 7.1 percent. In contrast, public transportation prices decreased 6.9 percent over the year, with airline fares declining 9.4 percent.

Prices for new vehicles increased 1.0 percent between December 2022 and December 2023, after increasing by 5.9 percent over the previous year. Used cars and trucks prices declined 1.3 percent over the year, after decreasing 8.8 percent in 2022.

Medical care index rises

The CPI-U for medical care rose 0.5 percent from December 2022 to December 2023, after rising 4.0 percent from December 2021 to December 2022. (See chart 7.) Over the past decade, medical care prices have increased at a 2.6-percent annual average rate.

In 2023, prescription and nonprescription drug prices rose by 3.3 percent and 8.3 percent, respectively.

The index for medical care services declined 0.5 percent from December 2022 to December 2023, with mixed movements among its subcategories—health insurance, physicians’ services, and hospital services. Health insurance prices decreased 27.1 percent over the year, following a 7.9-percent increase in 2022. Physicians’ services prices declined 0.6 percent in 2023, while hospital services prices rose 5.5 percent.

Price movements in other major categories

Among the other major CPI-U categories, apparel prices increased 1.0 percent from December 2022 to December 2023. (See chart 8.) Men’s and boys’ apparel, footwear, and women’s and girls’ apparel prices rose by 1.3 percent, 0.7 percent, and 0.6 percent, respectively.

Education and communication prices declined 0.1 percent over the year. The education component increased 2.4 percent, while communication decreased 1.7 percent.

The CPI-U for recreation increased 2.7 percent from December 2022 to December 2023. Video and audio prices also increased 2.7 percent over the year. Pets, pet products and services prices rose 5.1 percent and photography prices increased 6.3 percent.

Other goods and services prices (which includes personal care products and services, tobacco and smoking products, and other personal services such as legal services or financial services) rose 5.5 percent over the year. Prices for personal care increased 5.0 percent and tobacco and smoking products prices increased 7.8 percent from December 2022 to December 2023.

Summary

The CPI-U increased 3.4 percent in 2023, largely driven by an increase of 6.2 percent in the shelter index. Food prices increased, while energy prices decreased over the year. Excluding food and energy, price increases came in transportation, recreation, medical care, and apparel.

This Beyond the Numbers article was prepared by Casey Carter, economist in the Office of Prices and Living Conditions (OPLC), U.S. Bureau of Labor Statistics. E-mail: CPIA@bls.gov; telephone: (202) 691-7000.

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services or the information voice phone at: (202) 691-5200. This article is in the public domain and may be reproduced without permission.