U.S. Inflation Continues to Ease in November

  in   Insights

Inflation continued to moderate in November, indicating that the Federal Reserve’s efforts to put the brakes on consumer price increases by raising interest rates is working. The price of goods and services paid by U.S. consumers rose 3.1% in the year-ending November, according to the Consumer Price Index (CPI) for All Urban Consumers measured by the Bureau of Labor Statistics. That was marginally lower than the 3.2% annual rate in October and marginally above the recent low of 3% from June. Annual inflation as of November was in line with economists’ expectations (3.1%) but still notably beyond the Federal Reserve’s target of 2%. However, inflation has cooled considerably since reaching a 40-year high of 9.1% in June 2022. For comparison, the inflation rate averaged 1.6% annually in the five years leading up to the COVID-19 pandemic (2015-2019). Core inflation, which strips out volatile costs of food and energy, was unchanged on a year-over-year basis remaining at 4% in October and November. Still, that was the smallest annual increase since September 2021. The energy index fell 5.4% in the year-ending November, with lower gas prices (-8.9%) contributing to that downturn. The cost of shelter, which is keeping the overall inflation rate high, rose 6.5% from a year ago. Still, that was the slowest increase in over a year. However, the shelter index has a well-documented lag effect. Excluding the cost of shelter, consumer prices were up just 1.4% year-over-year in November.