Consumer prices in the U.S. rose in November as anticipated, reflecting a modest uptick in inflationary pressures, according to the latest data from the Bureau of Labor Statistics.
- M-O-M: The Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.3% on a seasonally adjusted basis, following a 0.2% rise in each of the previous four months.
- Y-O-Y: On an annual basis, inflation climbed to 2.7%, up from 2.6% in October, marking the highest level since July.
Food prices, which had been relatively stable throughout the year, saw a notable increase. November’s 0.4% rise was double October’s 0.2% gain and marked the third significant monthly jump in 2023.
- Grocery prices led the charge, climbing 0.5%—the largest monthly increase since January. This spike pushed the annual food index to its highest level since November 2023, underscoring renewed pressure on household budgets.
Energy costs also contributed to the monthly inflation increase, rising 0.2% in November—the largest jump since April. Gasoline prices broke their downward trend, increasing 0.6% month-over-month.
- Y-O-Y: Energy prices remain subdued on a year-over-year basis, down 3.2%, with gasoline specifically down 8.1% compared to November 2023.
Core inflation, which excludes volatile food and energy prices, rose 0.3% for the fourth consecutive month. This kept the annual core inflation rate steady at 3.3%, its level since September.
- Used car and truck prices surged 2.0% in November after a 2.7% jump in October, although they remain 3.4% lower year-over-year.
- New vehicle prices increased 0.6%, their largest gain since December 2022, though the annual index is still marginally negative at -0.7%.
Housing costs, which account for a significant share of the CPI, rose by 0.3% in November and contributed nearly 40% of the monthly CPI increase. However, annual shelter inflation eased to 4.7%, its lowest level since February 2022.
What They’re Saying: Nick Timiraosof the Wall Street Journal highlighted some encouraging trends on Twitter, noting that service inflation—excluding housing—has slowed significantly. Using a six-month annualized rate, it increased by just 3.2% in November, the lowest in over a year. However, Timiraos also cautioned that goods inflation, a key source of disinflation over the past 18 months, has now reversed.
- Michael Strain, Director of Economic Policy Studies at the American Enterprise Institute, offered a more sobering take. “Core inflation printed above expectations,” Strain wrote, adding that the Federal Reserve has not yet achieved a “soft landing” for the economy. Strain suggested that investors and economists may be underestimating the possibility of further interest rate hikes needed to bring inflation closer to the Fed’s 2% target.
Bottom Line: Consumer prices are rising. While service inflation seems to be slowing, goods inflation looks to be ramping back up. We are likely to get a cut a December but without proof of slowing growth its unlikely we will get another.
