The Bureau of Labor Statistics (BLS) released December Consumer Price Index (CPI) numbers today. On a seasonally adjusted basis, the CPI for All Urban Consumers rose 0.5% in December, the largest monthly increase since the 0.7% rise in June 2009. However, on a year-over-year basis the index was up a moderate 1.5%.

Energy prices spiked up 4.6% (SA) for the month, the largest monthly increase since the 7.4% jump in June 2009. On a year-over-year basis energy prices were up 7.7%. Food prices were up a modest 0.1% in December and 1.5% from a year earlier. The household energy price index, after falling 0.4% in November, rose 0.8% in December, and was up 0.8% from a year earlier. Core CPI, which excludes food and energy prices, rose a modest 0.1% for the month, and was up a moderate 0.8% from a year earlier.

NAHB forecasts that inflation as measured by the overall CPI will remain moderate throughout 2011, advancing 1.4% for the year. There will be some upward pressure on prices in 2012 with the CPI rising at a 1.7% annual rate in the fourth quarter.

The rental component of the CPI rose 0.2% for the second month in a row and was up 0.8% from December 2009. Owner’s equivalent rent, which is largely driven by the rent index without utilities and can be used as a measure of homeownership “prices”, rose 0.1% and increased 0.3% from a year earlier.

The rent and owner components of the CPI make up 31% of the CPI. The soft rental market and excess vacancies have kept rents from rising as fast as the general CPI over the past year, with the year-over-year increase in the rental index lagging the CPI by 0.7%. The rise in rents has matched the increase in the core CPI (0.8%). This is small solace to property owners who face higher energy costs that drive up their operating expenses. Going forward, as the economy improves, rental vacancy rates should fall, putting upward pressure on rents.