Falling US inflation is shifting the narrative on the pace of rate hikes

Inflation in the United States slowed again last month, the latest sign that price hikes are easing despite the pressure they continue to put on American households.

Consumer prices rose 7.1 percent year-on-year in November, the government said on Tuesday. That was a sharp drop from 7.7 percent in October and a recent high of 9.1 percent in June. It was the fifth consecutive delay.

On a month-to-month basis, giving a more recent snapshot, the CPI rose just 0.1 percent. And so-called core inflation, which excludes volatile food and energy costs and which the Federal Reserve tracks closely, slowed to 6 percent from a year earlier. From October to November, core prices rose 0.2 percent – the mildest increase since August 2021.

All in all, the latest numbers provided the strongest evidence yet that inflation in the United States has been decelerating steadily since the price acceleration that started about 18 months ago and hit a four-decade high earlier this year.

Food prices remained a trouble spot last month

Gas prices have plummeted from their summer high. The cost of used cars, health care, airline tickets and hotel rooms also fell in November. Likewise the furniture and electricity prices.

However, food prices remained a concern last month, rising 0.5 percent from October to November and up 12 percent year-on-year. Housing costs have also skyrocketed, although much of this data does not yet reflect real-time measurements showing a decline in house prices and apartment rents.

Wall Street immediately hailed Tuesday’s better-than-expected inflation data as further support for the Federal Reserve to slow and possibly pause its rate hikes until early next year. Dow Jones Industrial Average futures indicated a jump of more than 700 points at the start of trading.

Despite inflation falling further over the past month, the Fed plans to hike interest rates further. On Wednesday, the central bank will raise interest rates for the seventh time this year, a move that will further increase borrowing costs for consumers and businesses. Economists have warned that if the Fed continues to tighten credit to fight inflation, it is likely to cause a recession next year.

https://www.independent.ie/business/world/falling-us-inflation-shifts-narrative-on-pace-of-rate-hikes-42217752.html Falling US inflation is shifting the narrative on the pace of rate hikes

Fry Electronics Team

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