Inflation rose 2.7% on an annual basis in November, according to the latest government data report On the Consumer Price Index or CPI.
Last month's CPI was expected to come in at 2.7%, according to economists surveyed by financial data firm FactSet. The consumer price index, a basket of goods and services typically purchased by consumers, tracks changes in those prices over time.
The Federal Reserve has been battling high inflation since 2022, when it began raising its benchmark rate to ease demand from consumers and businesses. This has helped reduce the inflation rate from a recent peak of 9.1% to its current level in June 2022, yet the final step in the Fed's journey to push inflation down to a 2% annual rate is proving elusive.
“This is the second consecutive month that the year-on-year change in the consumer price index has increased. Prices rose 0.3% between October and November,” Lisa Sturtevant, chief economist at Bright MLS, said in an email after the report. ” Issued.
“Since May 2023, wages have been rising faster than inflation, which is the main reason why persistently high inflation has not slowed overall consumer spending,” he said.
But high consumer prices are hurting many families, he said. “Recent research from the U.S. Census Bureau shows that middle-income families are facing greater inflation pressures than higher-income families,” Sturtevant said.
Problem areas: shelter and grocery prices
The sticking point for consumers last month was shelter prices — rent and housing costs — as well as food, according to CPI data. Housing prices have proven particularly sticky since the pandemic, with home prices, rents and mortgage rates all rising significantly in recent years.
The Bureau of Labor Statistics said Wednesday that rising shelter costs contributed about 40% of CPI growth last month.
Food prices also rose last month, with groceries rising 0.5% on a month-over-month basis, the BLS said.
“That housing costs remain the number one source for higher prices, and that the rate of growth has slowed, is no relief,” Robert Frick, corporate economist at Navy Federal Credit Union, said in an email. “Prices for many food items rose, including eggs in that category, up about 8% on the month.”
He added, “This report may show a mild increase in the grand scheme of things, and should warrant another rate cut at the Fed meeting next week, but it poses a harsh burden of higher costs, especially for low-income Americans.” Has been.”
Fed's December rate meeting
The blockage could complicate the Fed's current rate-cutting path. In September, the central bank issued its first rate cut in four years, citing progress in inflation and weakness in the job market, followed by a second cut in November.
While most economists still expect the Fed to cut rates again at its next meeting on Dec. 18, some forecasters are now expecting fewer cuts in 2025.
“CPI print confirms market consensus of second [0.25 percentage point] rate cuts from the Federal Reserve,” Josh Hurt, senior U.S. economist at asset management firm Vanguard, said in a report.
Headwinds facing the Fed include President-elect Donald Trump's economic policies, including sweeping tariffs, tax cuts and the deportation of millions of illegal immigrants. Many economists view these policies as inflationWhich means the CPI could move upward in 2025 if Trump implements these policies next year.