U.S. Inflation Eases More Than Expected in November, Less Pressure on Consumers with Gas Prices Dropping

It seems that inflation is now easing, as the economic numbers showed that for the fifth straight month, U.S. inflation continued to decline, easing pressure on American consumers.

The report on inflation was released by the Bureau of Labor Statistics on Tuesday. It came as the Federal Open Market Committee held its final two-day policy meeting of the year.

Politico reported that consumer prices only rose by 7.1% in November from a year ago, and it is down compared to October, which saw a 7.7% increase from the previous year. The most recent peak was in June, with an inflation rate of 9.1%, meaning that inflation has eased for the fifth straight month.

Core inflation, which excludes volatile food and energy prices, also slowed to 6%, with core prices only increasing by around 0.2% from October to November. This was the mildest increase since August 2021.

This paints a picture that U.S. inflation is steadily slowing down after prices began sharply increasing around 18 months ago, with inflation reaching a 40-year high earlier this year.

Gas Prices Decreased as Inflation Slows

Gas prices hit their peak last summer and have taken a tumble ever since, according to the Associated Press. The prices for used cars, health care, airline fares, and hotel rooms also went down for November, as well as furniture and electricity costs.

Meanwhile, the same cannot be said for housing prices as housing costs increased. However, the data does not reflect yet measures that showed that home prices and apartment rents are also going down.

While many other goods continue to go down, grocery prices remain high. These increased by 0.5% from October to November and remain more expensive by 12% compared to last year. This means that more Americans are struggling for food than the previous year.

President Joe Biden says that this is a promising sign for American consumers. However, he also warned that prices are still too high and there is still much work to do, but things are getting better, he says.

Experts Warn That U.S. Inflation Might Still Increase

While prices steadily decrease, experts warn that inflation may increase again. The regional head of research for the Americas at ING, Padhraic Garvey, told the Financial Times that inflation could "quite easily" surprise next month.

The Central Bank will be raising its benchmark policy rate by 0.5% on Wednesday, breaking its consecutive 0.75% rate increases in the last few months. When that is implemented, the federal funds rate will go up to a new target range of 4.25-4.5%. However, experts warn that this would still not be enough to bring inflation back down to 2%.

Garvey stated that while the new inflation numbers would not be enough for the Fed, it would leave them in a better mood than the last few weeks. He also added that it would be more sensible for the Fed to be more hawkish and aggressive in their rates and not do a victory lap just yet.

READ MORE: Stimulus Checks 2022: Who Will Receive $1,050 Payments in California Starting This October?

This article is owned by Latin Post.

Written by: Rick Martin

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