Gas prices helped keep US inflation down to 3.1% in November
US inflation ticked down again last month, with cheaper gas helping further lighten the weight of consumer price increases in the US.
At the same time, the latest data on consumer inflation showed that prices in some areas – services such as restaurants, used cars and auto insurance – continued to rise uncomfortably fast.
Tuesday’s report from the labor department said the consumer price index rose just 0.1% from October to November. Compared with a year earlier, prices were up 3.1% in November, down from a 3.2% year-over-year rise in October.
Core prices, which exclude volatile food and energy costs, rose 0.3% from October to November, slightly more than the 0.2% increase the previous month. Measured from a year ago, core prices rose by 4%, the same as in October. The Federal Reserve considers core prices to be a better guide to the future path of inflation.
The mixed picture in Tuesday’s inflation report will probably keep the Fed on track to leave its benchmark interest rate unchanged when its latest meeting ends on Wednesday. Inflation still exceeds the Fed’s 2% annual target, which is why its officials are set to leave rates high. But with inflation cooling faster than expected, the Fed’s policymakers probably see no cause to further raise rates, at least for now.
The Fed’s widely expected decision to keep its key rate unchanged suggests that it is probably done raising borrowing costs. The central bank’s key rate stands at about 5.4%, the highest level in 22 years, in a determined drive to conquer inflation. Its rate hikes have made mortgages, auto loans, business borrowing and other forms of credit much costlier, reflecting the Fed’s goal of slowing borrowing and spending enough to tame inflation.
Helping keep a lid on inflation has been the steady decline in gas prices. From a peak of $5 about a year and a half ago, the national average has dropped to $3.15 a gallon as of Monday, according to AAA. Grocery store inflation, by contrast, has proved especially persistent and a drain on many households’ finances.
Chair Jerome Powell and other Fed officials have welcomed inflation’s steady fall from 9.1% in June 2022. But they have cautioned that the pace of price increases is still too high for the Fed to lower its guard.