US Consumer Prices Jump More Than Expected in November

Consumer prices in the United States rose by a higher margin than expected, last month, which might support the Federal Reserve’s decision not to cut interest rates again. So far, this year, the central bank has reduced borrowing costs three times, so the shift could mean rates hold strong through the holiday season. 

According to the United States Department of Labor, the consumer price index increased by 0.3 percent last month mostly on a rise in gasoline prices.  This is not much different from the 0.4 percent CPI advance in October.  Year-over-year, the November CPI is up 2.1 percent, against October’s 1.8 percent year-over-year rate. 

Indeed, this is higher than the 0.2 percent CPI growth that analysts had originally estimated.  

Not including food and energy sectors—which are quite volatile and, thus, changing constantly—core CPI was up nearly 0.23 percent: roughly 50 percent higher than October’s core growth.  This rise was lifted mostly by gains in health care and higher prices of used vehicles, travel accommodations, and recreation. 

It may also be wise to note that medical care costs are up more than 5 percent on the year, with housing increases not far behind (at more than 3 percent).  Clothing prices have slipped about 1.6 percent, in line with the drop in the price of new and used cars and trucks. As a matter of fact, the price for a new vehicle has slipped for the fifth consecutive month, likely the result of major discounts from automakers trying to liquidate older model inventory. 

In other metrics, owners’ equivalent rent of primary residence increased by 0.2 percent last month.  This is the equivalent measure of rent for a primary residence, what a homeowner would pay to rent or would receive when renting out their home; and it matches the rise in October.  Furthermore, the US rent index rose 0.3 percent after eking up just 0.1 percent in October.  This is the smallest such gain since April of 2011, and was buoyed by a rebound of more than one percent in hotel and motel accommodation costs (which fell 3.8 percent in October).