November Inflation Report: CPI Eases To 3.1% Annual Rate Ahead Of Fed Meeting

According to the latest Bureau of Labor Statistics report, the Consumer Price Index (CPI) edged down to an annual rate of 3.1% in November, aligning with market expectations.

The inflation report comes right before the imminent start of the Federal Open Market Committee (FOMC) meeting, scheduled to wrap up Wednesday with the interest rate decision and Chair Jerome Powell‘s press conference.

Key Highlights From November Inflation Report:

• The annual CPI inflation rate eased to 3.1% in November, down from October’s 3.2% and in line with the expected 3.1%.
• On a monthly basis, the CPI increased by 0.1%, up from the flat reading expected and October’s figure.
• The annual core inflation CPI held steady at 4%, in line with expectations. This brings an end to a series of six consecutive declines in core inflation.
• On a monthly basis, the core CPI advanced by 0.3%, up from October’s 0.2% and in line with estimates.

Chart: US Annual Inflation Rate And Core Inflation Rate

• Among key items within the CPI basket, the shelter index continued its upward trajectory in November, up 0.4% month-over-month, compensating for a decrease in the gasoline index, down 6%.
• Apparel prices saw a significant decline of 1.3% in anticipation of the holiday season, marking the largest drop since May 2020.
• The used cars and trucks index increased by 1.6%, putting an end to a streak of five consecutive monthly declines. Additionally, the motor vehicle insurance index saw a rise of 1.0% in November, following a 1.9% increase in the previous month.
• The ‘Supercore CPI’, which gauges core services excluding housing, surged to a 3.93% rate compared to a year ago

Market Reactions

Before the release of the inflation report, the markets had incorporated the expectation that the Federal Reserve would commence a cycle of rate cuts in May 2024, with the potential for up to five rate reductions by December 2024.

Following the release of the November inflation data, the U.S. dollar, as monitored by the Invesco DB USD Index Bullish Fund ETF UUP, experienced a dip.

In the meantime, equity futures saw a decline, with S&P 500 contracts showing a 0.3% increase an hour before the opening bells in New York.

Read now: Nasdaq, S&P 500 Futures Rise Ahead Of Inflation Data: Analyst Sees Smooth Finish To 2024 If Week’s Key Events Align With Expectations

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