U.S. consumer prices increased by the most in seven months in November, but that is unlikely to discourage the Federal Reserve from delivering a third consecutive interest rate cut next week against the backdrop of a cooling labor market and rental costs. Most of the rise in inflation reported by the Labor Department on Wednesday came from higher food prices as well as more expensive motel and hotel rooms. Rents, which have been the major driver of inflation, increased at the slowest pace since July 2021, and that typically bodes well for the inflation outlook.
The consumer price index rose 0.3% last month, the largest gain since April after advancing 0.2% for four straight months, the Labor Department's Bureau of Labor Statistics said. A 0.3% increase in the cost of shelter, which includes hotel and motel rooms, accounted for nearly 40% of the rise in the CPI. Shelter costs rose 0.4% in October. The cost of lodging away from home jumped 3.2% after climbing by 0.4% in October. Food prices increased 0.4% after rising 0.2% in October. Grocery store food prices surged 0.5%, with the cost of eggs soaring 8.2% amid an avian flu outbreak. Beef also cost more as did nonalcoholic beverages, but prices of cereals and bakery products fell 1.1%, the most since the government started tracking the series in 1989. In the 12 months through November, the CPI climbed 2.7% after increasing 2.6% in October. The rise in the CPI was in line with economists' expectations.
Source: Reuters