US inflation rose in November as price pressures continued

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Buoyed by cheaper used cars, hotel rooms and groceries, inflation in the United States rose slightly last month in the latest sign that other price pressures remain elevated.

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Consumer prices rose 2.7 percent in November from a year ago, up from an annual rate of 2.6 percent in October. Excluding food and energy costs, so-called core prices rose 3.3 percent, the same as last month. On a month-over-month basis, prices rose 0.3 percent from October to November, the biggest increase since April. Core prices also rose 0.3 percent for the fourth consecutive month.

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Wednesday’s inflation figures from the Labor Department are the last important issue Federal Reserve officials will consider before they meet next week to decide on interest rates. A modest increase in November will not be enough to dissuade officials from cutting their key rate for the quarter. The odds of a rate cut next week, as predicted by Wall Street traders, rose to 98 percent after the release of Wednesday’s inflation report, according to futures tracked by CME FedWatch.

The Fed lowered its benchmark rate, which affects most consumer and business loans, by the largest percentage point in September and by a quarter point in November. That cut lowered the central bank’s key rate to 4.6 percent, down from the top 40 percent at 5.3 percent.

Although inflation is now below the peak of 9.1 percent in June 2022, prices are still nearly 20 percent higher than they were three years ago — a major source of public discontent that helped propel President-elect Donald Trump’s victory for the Vice Presidency. Kamala Harris in November.

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Grocery prices jumped last month, a grim reminder to consumers that food prices continue to weigh heavily on household budgets. Beef prices fell 3.1 percent from October to November and are up 5 percent from last year.

Egg prices, which have fluctuated for more than two years, in part because of the bird flu outbreak, rose 8.2 percent last month. They are about 38 percent higher than last year.

Gas prices rose 0.6 percent from October to November, ending a streak of declines. However, gas is down more than 8 percent compared to last year. Hotel prices fell 3.2 percent from October to November and are 3.7 percent higher than last year.

But one key category that has been driving up prices showed signs of cooling in November: Rental prices rose 0.2 percent, the smallest increase since July 2021. The average cost of housing also rose 0.2 percent, the smallest increase. from April 2021.

Fed officials have made it clear that they expect inflation to moderate as it gradually cools back to its target level. In statements last week, central bank policymakers reiterated their belief that since inflation has fallen so far, there is no longer a need to keep their benchmark rate too high.

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In general, the Fed cuts rates to try to stimulate the economy enough to increase employment but not so much as to drive inflation higher. But the US economy appears to be in strong shape. It grew at an annual pace of 2.8 percent in the July-September quarter, boosted by healthy consumer spending. That has led some Wall Street analysts to suggest that the Fed doesn’t really need to cut its key rate.

But Chairman Jerome Powell said the central bank wanted to “re-balance” its rate to a lower level, one more in line with inflation. In addition, employment has fallen slightly in recent months, raising the risk that the economy may weaken in the coming months. Further rate cuts by the Fed could eliminate that risk.

Another potential risk to the Fed’s efforts to reduce inflation is Trump’s threat to impose higher tariffs on US imports – a move that economists say could increase inflation. Trump said he would impose a 10 percent tariff on all imports and 60 percent on goods from China. As a result, economists at Goldman Sachs have predicted that headline inflation will be 2.7 percent by the end of 2025. Without the tax, they estimate it would drop to 2.4 percent.

When the Fed meeting ends on Wednesday, it won’t just announce an interest rate decision. Policy makers will also release their latest quarterly economic and interest rate estimates. In September, they announced that rates will be cut four times by 2025. Officials may lower that number next week.

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