Inflation Slowing, but Still a Concern for the Federal Reserve
Inflation in the United States, as measured by the consumer price index (CPI), is expected to have slowed again in November. This is due in part to a weaker economy, which has reduced inflation pressures. However, the expected 0.3% increase in the CPI is not enough to ease concerns at the Federal Reserve or prevent the central bank from raising interest rates even higher to slow the economy.
Gas prices have fallen since the summer, reversing the spike in spring that sent inflation to a 40-year high. As a result, the cost of living has risen more slowly in the past four months. If the forecast is accurate, the annual rate of inflation would taper off to 7.3% from 7.7% in October and a peak of 9.1% in June.
The core rate of inflation, which excludes food and gas, is also forecast to rise 0.3% in November. This is still higher than the monthly gains that were the norm before the pandemic. The yearly rate of core inflation may fall slightly to 6.1% from 6.3% in the previous month. The rate peaked at 6.6% in November.
The increase in the cost of goods, excluding energy, has relaxed to 5% in October from 12.4% in February. However, the increase in the price of services continues to accelerate. The cost of services, excluding energy, has risen 6.8% in the past year. This is due in part to the increasing cost of labor, which is the biggest expense for most service-oriented businesses.
Rents have jumped 7.5% in the past year, marking the biggest surge since 1982. Rents are starting to decrease as the economy slows, but the Fed and Wall Street are watching for clear evidence of a reversal. Even if rents and home prices level off, the change may not immediately show up in the CPI report.
Gas prices have fallen since the summer, reversing the spike in spring that sent inflation to a 40-year high. As a result, the cost of living has risen more slowly in the past four months. If the forecast is accurate, the annual rate of inflation would taper off to 7.3% from 7.7% in October and a peak of 9.1% in June.
The core rate of inflation, which excludes food and gas, is also forecast to rise 0.3% in November. This is still higher than the monthly gains that were the norm before the pandemic. The yearly rate of core inflation may fall slightly to 6.1% from 6.3% in the previous month. The rate peaked at 6.6% in November.
The increase in the cost of goods, excluding energy, has relaxed to 5% in October from 12.4% in February. However, the increase in the price of services continues to accelerate. The cost of services, excluding energy, has risen 6.8% in the past year. This is due in part to the increasing cost of labor, which is the biggest expense for most service-oriented businesses.
Rents have jumped 7.5% in the past year, marking the biggest surge since 1982. Rents are starting to decrease as the economy slows, but the Fed and Wall Street are watching for clear evidence of a reversal. Even if rents and home prices level off, the change may not immediately show up in the CPI report.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.