Inflation Falls More than Expected in November

Consumer prices fell more than expected in November, according to the latest data from the Bureau of Labor Statistics.

• Y-O-Y: The Consumer Price Index for All Urban Consumers increased 7.1% when compared to November 2021, this was 0.6% below October’s number and was the lowest print of 2022.

• M-O-M: Consumer prices were up 0.1% in November on a seasonally adjusted basis, this is down from the 0.4% increase in October and the lowest print since August.

Beat The Street. Economists had projected November’s print to come in at 7.3% year-over-year and a month increase of 0.3%.

The Core. The Core index was also better than expected with a year-over-year increase of 6.0% (vs estimates of 6.1%) and a monthly increase of 0.2% (vs estimates of 0.3%).

Food. While overall food prices are still up double digits, the 10.6% reading was the lowest annual increase since June and the 0.5% monthly increase was the lowest level since December 2021.

• Food at home and food away from both were up 0.5% for the month while at home food continues to outpace food away 12.0% to 8.5%.

Energy. Energy prices were a big reason the topline was lower than expected with prices overall falling 1.6% for the month. This was thanks to a 2.0% drop in gasoline prices along with electricity prices falling 0.2%.

• Energy prices overall is still up 13.1% year-over-year.

Housing. Shelter costs steady climb has worried economists because shelter costs are not only 1/3 of the index but they are also tend to be stickier than other commodities. However, shelter costs provided some relief in November with prices up 0.6%, this is down from October (0.8%) and the lowest reading since July.

• Despite the slowdown, shelter costs are now up 7.1% year-over-year in November. this is the highest reading since they began tracking this back in 1990.

Notables. Other notable moves for the month were used cars and trucks with fell 2.9% for the month. This was the 5th month in a row of declines and now puts used cars in negative territory with prices down 3.3% compared to territory.

• New car prices were flat for the month but are still up 7.2% for the year and apparel was positive for the first time in three months (up 0.2%) putting prices up 3.6% year-over-year.

Analysis. Just Wolfers, Senior Fellow at the Peterson Institute, says this a clear sign inflation has peaked. “Core CPI rose by only 0.2% in November, which is yet another positive (disinflationary!) surprise! Headline CPI rose only +0.1% in the month, also below expectations. Remarkably good news, for the 2nd month in a row. Inflation has clearly peaked.”

BOTTOM LINE: That is two good reports in a row, we could be on roll…