ECONOMY
Inflation Eased Slightly In November Thanks To Lower Gas Prices, But Rent Is Still Rising
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U.S. inflation dipped slightly in November, thanks largely to lower gas prices, but remained above the Federal Reserve’s target of 2%, according to data released Tuesday by the Bureau of Labor Statistics.
The Consumer Price Index increased 0.1% in November from October, and was up 3.1% from a year ago, a slightly lower annual rate than the 3.2% in October.
The core CPI, which excludes more volatile food and energy prices, increased 0.3% for the month and 4% for the year, driven by rising rent and shelter costs, along with increased costs for services such as car insurance and restaurants.
While food prices are still ticking up, the rate of inflation is cooling. Grocery prices rose 0.1% from October to November, after rising 0.3% in October, and were just 1.7% higher than a year ago.
Gas prices dropped 6% from October to November, with a national average price of just $3.14 per gallon on Tuesday, according to auto club AAA. Prices peaked at a little more than $5 per gallon last year.
The data comes after the agency announced last week that the U.S. added 199,000 jobs in November and the unemployment rate ticked down, defying recession expectations and bolstering signs of a soft landing on the way to the Federal Reserve’s target of 2% inflation.
The Federal Reserve last month held interest rates steady for the second time in a row, after aggressive hikes since March of last year to combat inflation. The central bank maintained the target range for the federal funds rate at 5.25% to 5.5%, despite recent indicators of strong economic growth and a resilient labor market.
The Fed is likely to see some signs of slowing price growth along with a resilient but moderated job market as a sign of progress toward reducing inflation. While job gains have hovered around 200,000 over the past three months, the economy was adding more than 300,000 jobs per month during the same period last year.
The Federal Reserve’s Federal Open Market Committee is scheduled to meet again this week, and while a worse jobs report may have signaled a coming rate cut, the Fed is expected to hold rates steady for the third straight time.
After last month’s meeting, Fed Chair Jerome Powell said there was still a long way to go.
“A few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. The process of getting inflation sustainably down to 2% has a long way to go,” he said.
TMX contributed to this article.
