Inflation rose 2.7% on an annual basis in November, according to the latest government report on the Consumer Price Index, or CPI.
Last month’s CPI was forecast to come in at 2.7%, according to economists surveyed by financial data firm FactSet. The Consumer Price Index, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.
The Federal Reserve has been battling high inflation since 2022, when it began ratcheting up its benchmark rate in order to dampen demand from consumers and businesses. That’s helped lower the inflation rate to its current level from a recent peak of 9.1% in June 2022, yet the last leg of the Fed’s journey to push inflation down to a 2% annual rate is proving elusive.
“This is the second month in a row that the year-over-year change in the Consumer Price Index has increased. Prices rose by 0.3% between October and November,” noted Bright MLS chief economist Lisa Sturtevant in an email after the report was released.
She added, “Since May 2023, wages have been rising faster than inflation, which is the main reason why persistently higher inflation has not slowed overall consumer spending.”
But the impact of high consumer prices is pinching many families, she added. “Recent research from the U.S. Census Bureau has shown that moderate-income families are experiencing the strain of inflation much more than higher-income households,” Sturtevant added.
Fed’s December rate meeting
That stalling may complicate the Fed’s current rate-cutting path. In September, the central bank issued its first cut in four years, followed by a second reduction in November, citing progress on inflation and weakness in the job market.
While a majority of economists still forecast the Fed will again cut rates at its next meeting, set for Dec. 18, some forecasters are now expecting fewer cuts in 2025.
Adding to the headwinds facing the Fed are President-elect Donald Trump’s economic policies, which include widespread tariffs, tax cuts and the deportations of millions of illegal immigrants. Many economists view these policies as inflationary, meaning that the CPI could inch upwards in 2025 if Trump enacts these policies next year.
