The latest consumer price index report indicates that prices cooled considerably in November, providing relief for households and businesses pressured by the past year's unprecedented high inflation rates.
According to the data released by the Bureau of Labor Statistics on Tuesday, prices increased by 7.1 percent in November compared to last year, the smallest annual increase since Dec. 2021, per The Washington Post. That number is down from October's 7.7 percent. The CPI increased 0.1 percent from October to November, down from 0.4 percent in the previous report. Additionally, last month's core inflation, which excludes food and energy costs, rose 0.2 percent, the smallest increase since August 2021. The new report found that rent costs were the largest contributor to last month's inflation. Rent increased 0.8 percent over October, a slight increase from the previous report.
While inflation is still high, the latest data showed further progress since the October report, offering a glimmer of hope that the Federal Reserve's aggressive tactics to reduce inflation are paying off. Diane Swonk, chief economist at KPMG, told the Post the latest report is promising news. "The supply chain disruptions, all the stuff we thought was boosting inflation, is now unwinding. And that's good news."
Some believe the latest trends will encourage the Federal Reserve to take a less aggressive approach to raising rates. Paul Ashworth, the chief North America economist for Capital Economics, said, "The Fed could dismiss the better-than-expected October as just one month's data, but the further slowdown in November makes this new disinflationary trend harder to dismiss," per CNBC.
The latest CPI report comes hours before the Federal Open Market Committee begins its two-day meeting. They are expected to announce a 0.5 percentage point rate increase, down from a record four consecutive 0.75 percent increases earlier this year.