Inflation rose by an annual 2.7% in November, according to the latest government report in the consumer price index, or IPC.
Last month’s CPI was expected to come in at 2.7%, according to economists polled by financial data firm FactSet. The consumer price index, a basket of goods and services that consumers typically buy, tracks the change in those prices over time.
The Federal Reserve has been battling high inflation since 2022, when it began raising its benchmark rate to curb consumer and business demand. This has helped reduce the inflation rate to its current level from a recent peak of 9.1% in June 2022, but the latest leg of the Fed’s journey to reduce inflation to an annual rate of 2 % is proving difficult.
“This is the second month in a row that the year-over-year change in the consumer price index has increased. Prices rose 0.3% between October and November,” noted Bright MLS Chief Economist Lisa Sturtevant. in an email after the report. released
He added: “Since May 2023, wages have risen 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, he added. “Recently 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
This shutdown may complicate the Fed’s current path of rate cuts. In September, the central bank issued its first rate cut in four years, followed by a second cut in November, citing progress in inflation and a weak labor market.
While most economists still expect the Fed to cut rates again at its next meeting, scheduled for Dec. 18, some forecasters now expect fewer cuts in 2025.
Adding to the headwinds the Fed faces are President-elect Donald Trump’s economic policies, which include sweeping tariffs, tax cuts and the deportation of millions of illegal immigrants. Many economists consider these policies inflationarymeaning the CPI could rise in 2025 if Trump enacts these policies next year.