Inflation Rose as Expected in November

The U.S. Bureau of Labor Statistics (BLS) reported that the consumer price index (CPI) rose 2.7% year over year in November, up from 2.6% in October. After six consecutive months of slowing rates, readings have increased in the last two months. While the November figure meets Dow Jones consensus predictions, it will likely encourage the Federal Reserve (Fed) to cut interest rates again.

The “core” CPI, which strips out the unpredictable food and energy components, was unchanged at 3.3% in November from October, also matching projections. Shelter costs rose 0.3% from October to November, accounting for 40% of the CPI. Shelter prices are up 4.7% on a 12-month basis. Food prices were also notably higher in November, increasing 0.4% for the month and 2.4% over the last year.

“Recent research from the U.S. Census Bureau has shown that moderate-income families are experiencing the strain of inflation much more than higher-income households.”

Lisa Sturtevant, Bright MLS chief economist

Workers’ paychecks have been rising faster than inflation since mid-2023, which may explain why stubbornly higher inflation has not slowed overall consumer spending. A Bankrate analysis of BLS data suggests that real wage growth hasn’t been enough to offset the two years of prices disproportionately increasing faster than paychecks. The real average hourly earnings remain unchanged from October, but the real average weekly earnings rose 0.3% in November and 1.3% from one year ago.

What’s Next?

Inflation readings have slowly been moving toward the Fed’s 2% target, but this is the second consecutive month that the CPI’s year-over-year change has increased. November’s moderate growth will likely encourage the Fed to continue cutting high interest rates. Although the Fed has been cutting rates recently, economists expect fewer reductions in 2025.

Inflation continues to apply financial pressures on Americans, who pay more for everyday necessities such as food and rent. Individuals should continue to monitor the economy and associated inflation trends, adjusting their financial habits accordingly. Employees should check with their managers for financial and mental wellness benefits and related resources.

We will keep you updated with any notable changes. Contact us if you should have any questions.