CPI rose 2.7% in November from a year ago as Fed struggles to snuff out inflation
Inflation rose 2.7% on an annual basis in November, according to the latest government report on the Consumer Price Index, or CPI.
Last month's CPI was forecast 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 bought by consumers, tracks the change in those prices over time.
The Federal Reserve has been battling high inflation since 2022, when it began ratcheting up its benchmark rate in order to dampen demand from consumers and businesses. That's helped lower the inflation rate to its current level from a recent peak of 9.1% in June 2022, yet the last leg of the Fed's journey to push inflation down to a 2% annual rate is proving elusive.
"This is the second month in a row that the year-over-year change in the Consumer Price Index has increased. Prices rose by 0.3% between October and November," noted Bright MLS chief economist Lisa Sturtevant in an email after the report was released.
She added, "Since May 2023, wages have been rising faster than inflation, which is the main reason why persistently higher inflation has not slowed overall consumer spending."
But the impact of high consumer prices is pinching many families, she added. "Recent research from the U.S. Census Bureau has shown that moderate-income families are experiencing the strain of inflation much more than higher-income households," Sturtevant added.
Problem areas: Shelter and grocery prices
Pinch points for consumers last month were shelter prices — rent and housing costs — as well as food, according to the CPI data. Housing prices have proved particularly sticky since the pandemic, with home prices, rents and mortgage rates all rising significantly in recent years.
The increase in shelter costs contributed about 40% of the CPI increase last month, the Bureau of Labor Statistics said Wednesday.
Food prices also rose last month, with groceries increasing 0.5% on a month-over-month basis, the BLS said.
"Shelter costs continue to be the number one source for higher prices, and that the rate of increase has slowed is no comfort," said Robert Frick, corporate economist with Navy Federal Credit Union, in an email. "Many food prices rose, including the proxy for that category, eggs, up about 8% for the month."
He added, "This report may show a mild increase in the grand scheme, and should guarantee another rate cut when the Fed meets next week, but especially for lower-income Americans it's adding to the harsh burden of high costs."
Fed's December rate meeting
That stalling may complicate the Fed's current rate-cutting path. In September, the central bank issued its first cut in four years, followed by a second reduction in November, citing progress on inflation and weakness in the job market.
While a majority of economists still forecast the Fed will again cut rates at its next meeting, set for Dec. 18, some forecasters are now expecting fewer cuts in 2025.
"The CPI print confirms the market consensus of another [0.25 percentage point] rate cut from the Federal Reserve," Josh Hirt, senior U.S. economist at asset management firm Vanguard, said in a report.
Adding to the headwinds facing the Fed are President-elect Donald Trump's economic policies, which include widespread tariffs, tax cuts and the deportations of millions of illegal immigrants. Many economists view these policies as inflationary, meaning that the CPI could inch upwards in 2025 if Trump enacts these policies next year.