By Manuel Gutierrez, Consulting Economist to NKBA
Inflation took a better-than-expected turn last month, as the Consumer Price Index (CPI) rose just 0.1 percent from October. This modest increase, less than economists had anticipated, follows two months of prices rising nearly 0.5 percent each month.
- November’s minimal increase slashed the annual inflation rate to 7.1 percent from 7.7 percent posted the previous month. The report beat expectations of 7.3 percent.
- The downward trend indicates that the Federal Reserve’s aggressive rate hikes are starting to have a positive effect on inflation, cooling the overheated economy. The Fed raised rates seven times this year, most recently last week with a 0.5 percent bump — smaller than four previous consecutive hikes of 0.75 percent.
- Consumer prices have fallen each month since they hit a 40-year high of 9.1 percent in June.
- Some housing-related items increased, including flooring (+0.6 percent) and household appliances (+0.9 percent) for the month.
- YOY, flooring is up 10.2 percent while appliances are just 1.7 percent higher than a year ago. The price of windows, on the other hand, continued to slide, falling 1.4 percent in November and are only 2.4 percent higher YOY.
- Core inflation, which excludes volatile food and energy prices, is up by 6 percent YOY, an improvement on the annual rate of 6.3 percent registered in October. Food prices rose 0.5 percent in November and are 10.6 percent higher YOY.
