Is this the new normal for prices?
Inflation increased slightly in November, with prices remaining high for consumers, presenting fresh data for the Federal Reserve as it prepares for its upcoming meeting. According to the Labor Department, the consumer price index (CPI), which tracks the cost of everyday goods like gasoline, groceries, and rent, rose by 0.3% in November and 2.7% compared to the previous year. These figures met economists’ expectations and showed a slight increase over October’s numbers, when the CPI was at 2.6% annually and 0.2% for the month.
Core prices, which exclude the volatile costs of food and energy, also increased by 0.3% on a monthly basis, bringing the year-over-year increase to 3.3%. This marks the same growth rate as the previous month, indicating persistent inflationary pressures despite efforts to bring inflation closer to the Federal Reserve’s 2% target. High inflation continues to place significant strain on U.S. households, especially for lower-income families who spend a larger portion of their income on essentials like food and housing, leaving them with less room to save.
Housing costs contributed significantly to the overall CPI increase, accounting for nearly 40% of the rise in November. The shelter index saw a 0.3% increase for the month and is up 4.7% from a year ago. Energy prices also rose by 0.2% after remaining unchanged in October, though they were down 3.2% compared to last year. Gasoline prices climbed by 0.6% month-to-month but are still 8.1% lower than last November. Electricity prices dropped by 0.4% in November, but are up 3.1% year-over-year. Food prices also saw an increase, with overall food costs rising 0.4% for the month and 2.4% compared to the previous year.
Prices for meats, poultry, fish, and eggs saw a notable increase, with egg prices jumping 8.2% in November and up 37.5% year-over-year due to a bird flu outbreak. Meanwhile, transportation services showed no change from October, though they remain 7.1% higher than last year. Other costs, like auto insurance and motor vehicle repairs, also increased, further reflecting the ongoing financial strain on consumers. The Federal Reserve is expected to lower interest rates by 25 basis points at its meeting next week, despite the uptick in inflation. Analysts suggest that the data, while slightly higher than expected, remains favorable enough to give the Fed confidence to proceed with the rate cut, and even keep the possibility of another cut in January on the table.
