U.S. inflation ticked down again last month, with cheaper gas helping further lighten the weight of consumer price increases in the United States.
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 per cent from October to November. Compared with a year earlier, prices were up 3.1 per cent in November, down from a 3.2 per cent year-over-year rise in October.
Core prices, which exclude volatile food and energy costs, rose 0.3 per cent from October to November, slightly faster than the 0.2 per cent increase the previous month. Measured from a year ago, core prices rose four per cent, the same as in October. The U.S. 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 likely keep the Fed on track to leave its benchmark interest rate unchanged when its latest meeting ends Wednesday. Inflation still exceeds the Fed’s two per cent annual target, which is why its officials are set to leave rates high. But with inflation cooling faster than expected, the Fed’s policymakers likely see no cause to further raise rates, at least for now.
The Fed’s widely expected decision Wednesday to keep its key rate unchanged for a third straight time suggests that it’s probably done raising borrowing costs. The central bank has raised its key rate to about 5.4 per cent, 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.
