Fueled by pricier used cars, hotel rooms and groceries, inflation in the United States moved slightly higher last month in the latest sign that some price pressures remain elevated.
Consumer prices rose 2.7% in November from a year earlier, up from a yearly figure of 2.6% in October. Excluding volatile food and energy costs, so-called core prices increased 3.3%, the same as in the previous month. Measured month to month, prices climbed 0.3% from October to November, the biggest such increase since April. Core prices also rose 0.3% for a fourth straight month.
Wednesday’s inflation figures from the Labor Department are the final major piece of data that Federal Reserve officials will consider before they meet next week to decide on interest rates. The relatively mild November increase won’t likely be enough to discourage the officials from cutting their key rate by a quarter-point. The probability of a rate cut next week, as envisioned by Wall Street traders, rose to 98% after Wednesday’s inflation report was released, according to futures pricing tracked by CME FedWatch.
“It’s generally in the ballpark of what the Fed would like to see,” said Jason Pride, chief investment strategist at Glenmede, a wealth management firm. Though sharp increases for such items as groceries and hotel rooms increased overall inflation last month, those categories are often volatile. Pride noted that the cost of services, such as rents, car insurance, and airline fares, cooled in November.
Last week, Fed Chair Jerome Powell suggested that with the economy generally healthy, the Fed could reduce its key rate slowly.
“We’re not quite there on inflation, but we’re making progress,” Powell said. “We can afford to be a little more cautious.”
With the job market cooling, growth in Americans’ paychecks has slowed from a nearly 6% annual pace in 2022 to about 4% now, a rate nearly consistent with inflation at the Fed’s 2% target. Powell has said he doesn’t think the current job market is a driver of higher prices.
Randy Carr, CEO of World Emblem, a maker of patches, labels and badges for companies, universities and law enforcement agencies, said he is providing smaller wage increases, in the 3% to 5% range, than his company did during the height of inflation.
“Things have kind of leveled off,” he said.
Carr’s customers, which include the company that makes emblems for UPS uniforms, generally won’t accept price hikes much more than 2% a year. So World Emblem aims to offset the cost of its higher wages through greater efficiencies in manufacturing.
In September, the Fed slashed its benchmark rate, which affects many consumer and business loans, by a sizable half-point. It followed that move with a quarter-point rate cut in November. Those cuts lowered the central bank’s key rate to 4.6%, down from a four-decade high of 5.3%.
Though inflation is now way below its peak of 9.1% in June 2022, average prices are still about 20% higher than they were three years ago — a major source of public discontent that helped drive President-elect Donald Trump’s victory over Vice President Kamala Harris in November.
Grocery prices jumped last month, an uncomfortable reminder for consumers that food prices remain a big drag on households’ budgets. Beef prices leapt 3.1% just from October to November and are up 5% from a year earlier.
Egg prices, which have been volatile for more than two years, in part because of outbreaks of bird flu, soared 8.2% just last month. They are nearly 38% higher than a year ago.
Gas prices ticked up 0.6% from October to November, ending a string of declines. Still, gas is down more than 8% from a year earlier. Hotel prices leapt 3.2% from October to November and are 3.7% higher than a year ago.
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