Announced this morning, the Consumer Price Index (CPI) increased 0.1% in November, slightly higher than expected and grew 3.1% on an annual basis. Monthly prices for Utility (Piped) Gas Service, up 2.8%, and Used Cars and Trucks, up 1.6%, were relatively strong while monthly prices for Gasoline, down -6.0%, were relatively weak. Prices for Shelter were up 0.4% in November which was slightly more than the 0.3% increase the previous month. The core rate, which excludes prices for food and energy, increased 0.3% in November as expected, and grew 4.0% on an annual basis.
Overall, headline CPI inflation was again flat in November while core rates rose slightly more than the previous month. While headline inflation has moved down to the low 3% range on an annual basis, the core rate grew 4% annually, still double the Federal Reserve’s target. Coupled with the decent employment data last week, the Federal Reserve is likely to keep with the same message following this week’s meeting, indicating rates will stay higher for as long as it takes for core inflation levels to get down to their 2% goal. How long and how difficult it will be to get there and its impact on consumers and company earnings will be closely watched in the months ahead.
In all, the 10-year US treasury yield fluctuated as the data was released but has ticked higher overall and equity futures mixed as we head into the market open.
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