Inflation slowed again, but remained high in November, the CPI report shows
Inflation eased back significantly for a second month in November as prices of goods that rose during the pandemic continued to fall. Still, inflation remained high as the cost of many services continued to march higher.
Consumer prices rose 7.1% from a year earlier, down from a 7.7% increase in October and a 40-year high of 9.1% in June, as high food and rent costs again offset falling gas prices, according to the Labor Department’s Consumer Price Index .
The increase in inflation last month was at the slowest pace since December last year. And that came in below expectations of 7.3%, which was predicted by economists surveyed by Bloomberg.
On a monthly basis, consumer prices rose just 0.1[ads1]% after a 0.4% increase the previous month.
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What is the core consumer price index?
Core prices, which exclude volatile food and energy commodities and better reflect underlying trends, rose 0.2% from October after rising 0.3% the previous month. It reduced the annual increase from 6.3% to 6%.
What is the stock ticker right now?
The better-than-expected inflation news sent stocks soaring in early trade, as investors expected the report to prompt the Federal Reserve to scale back its aggressive rate hikes aimed at curbing price increases. The Dow Jones industrial average jumped about 650 points, or nearly 2%, just after trading began at 9:30 a.m.
The Fed is expected to raise the key interest rate by half a percentage point on Wednesday after four straight three-quarter point increases. Morgan Stanley predicts another quarter-point increase early next year before the central bank takes a break.
“The worst of inflation is very likely behind us, but high inflation is not over yet,” said Jason Schenker, president of Prestige Economics.
By and large, the prices of goods such as used cars and furniture have fallen or stabilized as the Covid-19-triggered supply chain disruptions have eased. But prices for services have continued to rise as more Americans return to travel and other activities and persistent labor shortages increase.
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Why are gas prices falling again?
Gas prices fell for the fourth time in five months on recession worries and softer global demand for oil. Pump prices fell 2%, but were still up 10% annually. They jumped in October on OPEC production cuts, but have resumed their decline from record levels during the summer.
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Will food prices continue to rise?
Grocery prices are finally starting to moderate, but only gradually, rising 0.5% from October and 12% over the past year. The price of commodities such as wheat and corn have fallen in recent months due to easing global demand, but rapidly rising wages for workers are still pushing prices up on supermarket shelves, Barclays wrote in a research note.
In November, prices for breakfast cereals and bakery products rose 1.1% from the previous month and 16.4% from the previous year. Bread prices rose by 2% and 15.7% annually. And egg prices rose a further 2.3% and 49.1% from a year ago.
But some food costs, which had been rising, fell. Prices for uncooked ground beef fell 0.9%, bacon fell 1.8%, and fresh fish and seafood fell 1.4%.
Restaurant prices also continued to rise, but less sharply, rising 0.5% after a 0.9% jump last month.
Many Americans are still feeling the long rise in food prices, not the recent moderation.
Oren Spiegler, 66, of Peters Township, Pennsylvania, says he’s a little relieved about the drop in gas prices, but it doesn’t make him feel much better about inflation in general.
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“I don’t see relief in the grocery store and I don’t see relief in restaurants,” he said. “I eat out quite often and I can’t get over the prices.”
At the supermarket, he foregoes eggs and other goods whose prices have risen and substitutes cheaper products, such as walnuts. And on a recent visit to an upscale restaurant, Italian wedding soup was listed at $9.99, up from $6.99 about a year ago. He and his wife decided to just have pizza.
“I can’t pay it,” he says. “I just don’t feel good about it.”
Spiegler had planned a trip to the Sarasota, Florida area to watch the Pittsburgh Pirates’ spring training games — until he found out that the nightly rate for a hotel had jumped to $465 from $300 a couple of years ago.
Some other costs continued to rise. Rent rose by 0.8% monthly and 7.9% over the past year. Economists expect rents to fall, based on new leases, but only later next year. Car repair costs rose by 1.3% and 11.7% annually. And the price of a haircut increased by 1.4% and 6.8% from a year ago.
But used car prices continued to decline, falling 2.9%, and are now down 3.3% annually after rising significantly earlier in the health crisis. Flight prices decreased by 3%. Medical services fell 0.7% as insurance costs eased. And furniture fell 0.8%.
