The November’s U.S. Consumer Price Index (CPI) increased slightly from the previous month, marking the second consecutive monthly rise.
While the figures aligned with forecasts, experts suggest this underscores the Federal Reserve’s ongoing struggle to reduce inflation.
According to a report released by the U.S. Department of Labor on Wednesday, the November CPI rose 2.7% year-over-year, up 0.1 percentage points from the previous month.
The price level climbed 0.3% month-over-month, the steepest increase since April.
The core price index, which excludes the volatile food and energy sectors, remained at 3.3% year-over-year for the third consecutive month.
The Wall Street Journal noted that these price indicators reflect sustained consumer spending in the U.S., bolstered by a resilient labor market.
University of Michigan and the Conference Board analyzed the data and found that U.S. consumers have adopted a more optimistic outlook since the November presidential election.
The Wall Street Journal also reported that businesses are optimistic about the economy, buoyed by President-elect Donald Trump’s proposed tax cuts and deregulation agenda.
Prior to the CPI release, economic news channel CNBC highlighted the Federal Reserve’s ongoing challenge in bringing inflation down to its 2% target, suggesting that elevated prices have become a regular occurrence for American households.
Dan North, an economist at Allianz Trade Americas, remarked, “There are no means to kill the inflation dragon,” adding, “There is no clear movement indicating that prices are falling to 2%.” The CPI figures, in line with expectations, confirmed this assessment.
Despite the recent rebound in prices, traders are banking on the Federal Reserve to cut rates by 0.25 percentage points at this year’s final Federal Open Market Committee (FOMC) meeting, which will conclude on the 18th.
As of December 10th, CME Group’s FedWatch tool indicated an 88% probability of a rate cut.
The market anticipates that the Federal Reserve will maintain current rates at the January FOMC meeting and implement a cut in March, followed by one or two additional reductions later in the year.
