The US closed out 2022 with another big drop in inflation

• Thursday's consumer-price-index report highlights how the inflation situation ended in 2022.
• Inflation remained sky-high, with the CPI increasing 6.5% year over year in December.

Data out Thursday morning shows that while inflation continues to be high, the US ended 2022 with inflation cooling again, based on year-over-year changes in the consumer-price index.

According to the release from the Bureau of Labor Statistics, the index rose year over year in December to 6.5%. Economists surveyed by Bloomberg forecast a large drop from November's year-over-year increase of 7.1%; they estimated the CPI would climb to 6.5% in December from the same time a year ago.

For month-over-month figures, the index fell by a seasonally adjusted 0.1% between November and December. The median forecast was an unchanged index.

Energy prices experienced a big drop month over month, falling by 4.5%. Seasonally adjusted gas prices for all types fell 9.4%.

Used-car and -trucks price also dropped in December, declining by a seasonally adjusted 2.5% after a 2.9% decline in November.

While some prices fell over the month, shelter didn't. It jumped 0.8% from November. In unadjusted data, the shelter index is 7.5% higher than it was the same time a year ago. That means housing prices are continuing to accelerate, according to year-over-year changes.

Additionally, the index for airline fares tumbled 3.1%, similar to the 3% decline the previous month. Unadjusted year-over-year changes show airline prices slowed again, with a year-over-year increase of 28.5% in December after a 36% year-over-year increase in November.

Core CPI increased 5.7% in December from the same time a year ago, the same as the expectation. After a 0.2% increase in November, core CPI increased 0.3% December, matching forecasts.

Thursday's report highlights that the year closed out with inflation elevated and above the Federal Reserve's 2% target rate. But minutes from last month's Federal Open Market Committee meeting said the central bank thought inflation would be more moderate in 2023.

The minutes said the "market- and survey-based measures continued to point to expectations for a moderation of inflation over the coming year."

The elevated inflation rate in the US could also influence an economic downturn later this year if it came about.

"With inflation remaining unacceptably high, participants expected that a sustained period of below-trend real GDP growth would be needed to bring aggregate supply and aggregate demand into better balance and thereby reduce inflationary pressures," the minutes said.

The Fed hiked interest rates seven times in 2022 as it dealt with inflation. According to the Financial Times, Gita Gopinath, the first deputy managing director of the International Monetary Fund, thinks the Fed should continue increases.

"If you see the indicators in the labor market, and if you look at very sticky components of inflation like services inflation, I think it's clear that we haven't turned the corner yet on inflation," Gopinath said.