Announced this morning, the headline Consumer Price Index (CPI) increased 0.3% in November, as expected and is one tenth higher than the previous month’s increase. On an annualized basis it grew 2.7%, above October’s figure. The core rate, which excludes prices for food and energy, increased 0.3% in November, as expected and the same as last month’s increase. It grew 3.3% on an annual basis, the same as October’s annual figure.
Looking at the individual categories, monthly prices for Used Cars and Trucks, up 2.0%, Gasoline, up 0.6%, and Food at Home, up 0.5%, were relatively strong while monthly prices for Electricity, down -0.4%, were relatively weak. Prices for Shelter were up 0.3%, slightly below levels seen in previous months.
Overall, inflation data points come in as expected in November, with increases in various categories including used cars, gasoline, and food. On an annualized basis, the headline measure was higher than the previous month and the core rate remains above 3%. Inflation appears sticky, especially the core rate which is still well above the Fed’s 2% annual target.
While the labor market appears intact, there was an uptick in unemployment in last week’s report suggesting some cooling in the labor market could be on the horizon. With sticky inflation and a possibly cooling labor market, the Federal Reserve has a lot to balance when considering their policy in the months ahead.
In all, the 10-year US treasury yield ticks lower following the report and equity futures are higher as we head into the market open.
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