Consumer price increases accelerated in November, a reminder that inflation remains a problem for households and policymakers.
The U.S. Bureau of Labor Statistics reported Wednesday that the consumer price index showed 12-month inflation at 2.7%, up 0.3% for the month. The annual rate increased by 0.1 percentage points from October.
Excluding food and energy costs, the core Consumer Price Index (CPI) increased by 3.3% on an annual basis and by 0.3% on a monthly basis. The 12-month core reading was unchanged from a month ago.
All numbers are in line with Dow Jones consensus estimates.
The data comes as Fed officials consider content for next week’s policy meeting, with markets strongly expecting the Fed to cut its benchmark short-term borrowing rate by 0.25 percentage point at the end of the meeting on Dec. 18, but then skipped January as they weighed back-to-back rate cuts Impact on the economy.
The report further solidified the prospect of a rate cut, with traders raising the likelihood of a rate cut to over 96%, according to CME Group’s FedWatch indicator.
While inflation is well below a 40-year high in mid-2022, it remains above the Fed’s 2% annual target. In recent days, some policymakers have expressed frustration with the resilience of inflation and said the pace of rate cuts may need to slow if more progress is not made.
If the Fed continues to cut interest rates next week, the federal funds rate will be lowered by a full percentage point since September.
Much of November’s rise in CPI came from housing costs, which rose 0.3% and are one of the most stubborn components of inflation. Fed officials and many economists expect housing-related inflation to ease as new lease agreements are negotiated, but the program continues to increase each month.
The Bureau of Labor Statistics estimates that housing projects, which account for about one-third of the weight in CPI calculations, accounted for about 40% of November’s total increase. The housing index rose 4.7% month-on-month in November.
Used car prices rose 2% monthly, while new car prices rose 0.6%, reversing a recent trend of declining prices for these items.
Elsewhere, food costs rose 0.4% on the month and 2.4% year-on-year, while the energy index rose 0.2% but fell 3.2% on the year.
The rise in CPI means average hourly earnings In a separate release, the Bureau of Labor Statistics said that when adjusted for inflation, worker employment was essentially flat this month but up 1.3% from a year earlier.
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