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Inflation Ticked Up in November
Hello Wanda,
With the Federal Reserve Bank’s last Federal Open Market Committee (FOMC) meeting of the year scheduled for next week, incoming indicators are under high scrutiny. Case in point: November’s Consumer Price Index (CPI) Report, aka inflation rate, which the Bureau of Labor Statistics released on Wednesday.
Although the Fed does not attach as much importance to the CPI as it does to the Personal Consumption Expenditure Index, which will be released the week following the FOMC meeting, it is nevertheless a crucial indicator regarding the direction US prices for goods and services is taking.
Unfortunately, progress against inflation seems to have stalled in the past few months. Price tags increased in November by the most in seven months, climbing by 2.7% for the 12 months ended in November, following a 2.6% increase in October. This is the first back-to-back annual acceleration since March. On a monthly basis, prices rose by 0.3% after rising 0.2% for the prior four months. The Core CPI, which excludes the more volatile prices of food and energy, rose 0.3% from October and increased 3.3% year-over-year for the third month, well above the Fed’s targeted rate of 2%.
Mixed Bag of Price Increases
Food prices were one of the primary drivers behind inflation this past month. Grocery store food prices surged 0.5%, with the cost of eggs soaring 8.2% amid an avian flu outbreak. Energy prices rose 0.2% and posted the category’s first increase in six months. New and used cars also saw price increases of 0.6% and 2%, respectively, likely driven by the rise in demand as residents in the country's Southeast replaced vehicles damaged by hurricanes.
On a more positive note, there may be light at the end of the tunnel regarding housing expenses. Although shelter costs make up the main portion of the rise in CPI, at almost 40%, it is a significant step down from the past months when that share has been north of 50%, and sometimes 70% and 90%. Rents increased 0.2%, the smallest gain since July 2021. In addition, owners' equivalent rent, a measure of the amount homeowners would pay to rent or earn from renting their property, rose 0.2%, the smallest gain since April 2021.
Overall, a majority of economists still forecast another rate cut at the upcoming FOMC meeting on December 18, though some are now expecting fewer cuts in 2025.
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or email.
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