The rate of inflation eased significantly for the second month in November as commodity prices that had risen during the pandemic continued to fall. However, inflation remained high as the cost of many services continued to rise.
Consumer prices rose 7.1% from a year earlier, down from 7.7% in October and a 40-year high of 9.1% in June, as rising food and rent costs again offset lower gas prices, according to the Labor Department’s Consumer Price Index. .
The increase in inflation last month was at the slowest pace since December last year. It came in below expectations of 7.3%, which was what economists had expected in a Bloomberg poll.
On a monthly basis, consumer prices increased by just 0.1% after rising 0.4% in the previous month.
Is a recession coming in 2023? Job growth is likely to slow sharply, and companies are bracing for the impact
What is inflation? Understand why prices are going up, what is causing it, and who is hurting the most.
What is the core consumer price index?
Core prices, which exclude volatile food and energy and better reflect underlying trends, rose 0.2% from October after rising 0.3% the previous month. This reduced the annual increase from 6.3% to 6%.
What is the stock tick now?
Better-than-expected inflation news sent stocks higher in early trade as investors speculated that the report would prompt the Federal Reserve to roll back its aggressive interest rate hikes in order to prevent a rally in prices. The Dow Jones Industrial Average jumped about 650 points, or roughly 2%, immediately after the 9:30 a.m. start of trading.
The Federal Reserve is expected to raise its key interest rate by half a percentage point on Wednesday after four consecutive increases of three-quarters of a point. Morgan Stanley expects another quarter-point increase early next year before the central bank pauses.
“The worst inflation is likely behind us, but hyperinflation is far from over,” said Jason Schenker, president of Prestige Economics.
On a large scale, prices of commodities such as used cars and furniture have been declining or stabilizing as the supply chain contraction caused by the COVID-19 virus has been declining. But prices for services have continued to rise as more Americans return to travel and other activities, and an ongoing shortage of workers increases.
Is inflation really cooling? Consumers are not convinced. How can this lead to higher rates.
Why are gas prices falling again?
Gas prices fell for the fourth time in five months, amid fears of recession and falling global demand for oil. Pump prices are down 2% but are still rising 10% annually. They jumped in October due to OPEC production cuts, but resumed their decline from record levels over the summer.
Gas prices fall:Americans are getting much-needed relief at the pump before the holidays
Will food prices continue to rise?
Grocery prices are finally starting to moderate, but more gradually, they’re up 0.5% from October and 12% over the past year. Barclays wrote in a research note that the cost of commodities such as wheat and corn has fallen in recent months due to slumping global demand, but the rapid rise in worker wages is still pushing up prices on store shelves.
In November, prices of cereals and bakery products jumped 1.1% from the previous month and 16.4% from the previous year. Bread prices increased by 2% and 15.7% annually. Egg prices increased by 2.3% and 49.1% over last year.
But some food prices that were on the way up have eased. Uncooked minced beef prices decreased by 0.9%, bacon decreased by 1.8%, and prices of fresh fish and seafood decreased by 1.4%.
Restaurant prices also continued to rise but less sharply, rising 0.5% after jumping 0.9% in the previous month.
The prolonged rise in food prices is still felt by many Americans, not the recent moderation.
Oren Spiegler, 66, of Peters, Pennsylvania, says he’s somewhat relieved by lower gas prices, but it doesn’t make him feel much better about inflation in general.
More Americans are buying expired food:With inflation on the rise, it’s a cheaper option. But is it safe?
“I don’t see relief in the grocery store, and I don’t see relief in restaurants,” he said. “I dine out a lot and can’t beat the prices.”
At the supermarket, he gives up eggs and other things that have gone up in price and substitutes cheaper products, such as nuts. And on a recent visit to an upscale restaurant, the Italian Wedding Soup was listed at $9.99, up from $6.99 almost a year ago. He and his wife decided to just eat pizza.
“I can’t pay that,” he says. “I just don’t feel good about it.”
Spiegler had been planning a trip to the Sarasota, Florida area to see Pittsburgh Pirates spring training games—until he found the nightly rate, which the hotel had jumped to $465 from $300 two years earlier.
Some other costs continued to rise. Rent jumped 0.8% per month and 7.9% over the past year. Economists expect rents to fall, based on new leases, but not until later next year. Auto repair costs rose 1.3% and 11.7% annually. And the price of a haircut increased by 1.4% and 6.8% from last year.
But used car prices have continued to fall, down 2.9%, and are now down 3.3% annually after increasing dramatically earlier in the health crisis. Airline ticket prices decreased by 3%. Medicare fell 0.7% as insurance costs fell. Furniture fell 0.8%.
“Amateur organizer. Wannabe beer evangelist. General web fan. Certified internet ninja. Avid reader.”
More Stories
Bitcoin Fees Near Yearly Low as Bitcoin Price Hits $70K
Court ruling worries developers eyeing older Florida condos: NPR
Why Ethereum and BNB Are Ready to Recover as Bullish Rallies Surge