November saw an increase in US consumer prices, which strengthened the Federal Reserve’s decision to maintain high interest rates for the foreseeable future.
According to government data, the so-called core consumer price index—which does not include food and energy costs—rose by 0.3% in November after increasing by 0.2% in October. For the second month, it increased by 4% from a year ago.
The core metric is preferred by economists above the entire CPI as a more accurate indicator of the inflation trajectory. This metric increased marginally in October after barely changing at all. It increased 3.1% over the previous year.
Tuesday’s data underscore the choppy nature of getting inflation back in line. While price pressures have largely retreated from multi-decade highs, a still-strong labor market continues to power consumer spending and the broader economy.
Fed officials begin a two-day meeting Tuesday that is expected to culminate with them holding interest rates steady again. Chair Jerome Powell will likely reiterate he and his colleagues want to see a more sustainable pullback in price growth before easing policy.
The numbers released on Tuesday highlight how difficult it is to get inflation back to normal. Although pricing pressures have significantly decreased from their multi-decade highs, consumer expenditure and the overall economy are nevertheless supported by a robust labor market.
Tuesday marks the start of a two-day meeting by Fed officials, which is anticipated to result in another interest rate freeze. Before easing policy, Chair Jerome Powell is expected to restate his and his colleagues’ desire to see a more durable slowdown in price inflation.
The Bureau of Labor Statistics numbers showed increases in health care costs, auto insurance, and rent. For the first time since May, used car prices increased.
Prices for shelter, which account for over one-third of the CPI overall, increased by 0.4%, offsetting a decrease in gas prices.
In contrast to services, consumers have recently experienced some respite from rising prices for items. The sixth month of declines in “core goods prices,” which do not include energy and food commodities, matched the longest run of declines since 2003.
The Fed is hoping for more relaxed labor market conditions to control demand throughout the economy, particularly in light of the robust jobs data from last week.
