Inflation pressures in America remained muted last month, according to a new report from the Bureau of Labor Statistics. Specifically, the consumer price index (CPI) rose by 0.3 percent in November, more than anticipated but a smaller gain compared to October. Increases in the costs of food and especially energy contributed to last month’s firmer headline print, but core CPI, which strips out these volatile components, climbed by just 0.2 percent in November. An uptick in the prices for apparel, healthcare, and shelter (rent and lodging) helped lift the narrower inflation gauge last month.
On a year-over-year basis, both headline and core CPI are now rising at rates above the Federal Reserve’s 2 percent “target.” CPI, though, often runs “hotter” than other popular measures of inflation in America, such as the producer price index (PPI), also released this week, which showed that wholesale inflation rose at an annual rate of just 1.1 percent in November. Further, the Fed’s preferred gauge of household price pressures, the core PCE deflator, is up only 1.6 percent over the past twelve months, and updated projections out yesterday afternoon suggest monetary policymakers do not expect this to even return to the 2 percent level until 2021 at the earliest.
Sources: Econoday, U.S. DoL, FRBG, FRBSL