Inflation slowed again last month and the Federal Reserve Raised interest rates at the fastest pace in decades.
this Consumer Price Index (CPI) It was up 7.1% year-on-year and 0.1% month-over-month in November, the Bureau of Labor Statistics said on Tuesday. Economists had expected prices to rise 7.3% year-on-year and 0.3% monthly, according to Bloomberg data.
On a “fundamental” basis, which removes the variable food and energy components of the report, prices rose 6.0% year-over-year and 0.2% compared to November. Consensus forecasts call for a 6.1% year-on-year and 0.3% monthly increase in the core CPI reading.
WE stock futures rose after release. S&P 500 contracts rose 2.8%, while Dow Jones Industrial Average futures rose more than 700 points. Nasdaq futures were up 3.8%.
While figures for November show that inflationary pressures have eased, the costs of essential goods and housing facing US consumers are still stubbornly high.
The Federal Reserve watches more closely for “core” inflation, which gives policymakers a more nuanced look at inputs like housing. By contrast, the main CPI figure has largely moved with erratic energy prices this year.
While falling oil prices lowered headline inflation last month, the haven category of the CPI, which accounts for 30% of the overall CPI and 40% of the core reading, dominated the increase in all monthly items and more than offset the decreases. energy indices. The Bureau of Labor Statistics said the cost of shelter rose 7.1% from last year, accounting for about half of the total increase in the core CPI.
“Housing costs have a unique, symbiotic relationship with inflation,” Bright MLS Chief Economist Lisa Sturtevant said in a note.
In a speech at the Brooking Institution in Washington, DC last month, Federal Reserve Chairman Jerome Powell stressed that housing inflation is rising rapidly, while inflation in other essential services “floats but shows no clear trend.”
Meanwhile, food prices rose 0.5%, little change from the 0.6% increase seen in October. Four of the six major grocery food groups increased over the course of the month.
Tuesday’s key inflation report – perhaps the last major economic announcement of 2022 – also comes as the Federal Reserve kicks off its last meeting of the year. On Wednesday, members of the policy-making Federal Open Market Committee (FOMC) Preparing to raise interest rates by 50 basis pointsa slowdown from the 0.75% gains achieved in the last four meetings.
More clear-than-expected inflation data is unlikely to prevent officials from raising the benchmark policy rate to the predicted 0.50% at the end of the meeting or continuing another estimated 75 basis points increase in the new year. But it can support final messaging
(This post is breaking. Please check back for updates.)
Alexandra Semenova is a reporter for Yahoo Finance. follow him on twitter @alexandraandnyc
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