Prices on goods and services are still in the passing lane but the rate of those increases slowed to an annual rate of 3.1% in November, inching down from October’s 3.2% and a moderation driven in large part by cheaper gasoline across the U.S.
While overall inflation has been on a near steady decline since peaking at 9.1% in June 2022, the core annual rate, which strips out volatile food and energy prices, came in at 4% for November, unchanged from the previous month.
That’s according to the U.S. Labor Department’s November Consumer Price Index Summary, released on Tuesday.
Falling energy prices helped offset increases in other categories with the average cost of gasoline dropping 6% from October to November and coming in almost 9% lower than this time last year. The national average price of a gallon of regular was $3.14 on Tuesday, with Utah gas prices coming in under the $3 mark at $2.99 on average across the state, according to the latest data from AAA.
Mountain West states, which include Utah, saw regional inflation running a couple ticks under the national average at 2.9% in November.
While energy price trends were in negative territory in November, the cost of eating out was up .4% over October and 5.3% from the same time last year. The cost of shelter also saw a sharper increase, rising .4% in November from the previous month and 6.5% more costly on a 12-month basis.
“Falling inflation does not mean that prices are falling,” Lisa Sturtevant, chief economist at Bright MLS, told CNBC. “In fact, prices for just about everything are still higher than they were before the pandemic. Housing costs, in particular, are weighing on many individuals and families.”
The Labor Department report comes on the first day of the Federal Reserve’s final meeting of 2023 and one in which the monetary body is widely expected to hold steady on interest rates.
At its November meeting, the Fed voted to keep its benchmark rate at 5.25% — 5.5%, the highest in over two decades and the product of 11 interest rate hikes going back to March 2022. At a Nov. 1 press conference, Fed Chairman Jerome Powell signaled that the monetary body was ready to make another upward adjustment at its December meeting if necessary, but stressed that the decision would be based on the latest economic data.
Tuesday’s report, along with recent jobs data and other indicators, have most economists predicting that the Fed is done with increases for the foreseeable future and many believe interest rate cuts could be coming in 2024.
But, inflation remains well above the Fed’s 2% target rate and Federal Reserve Chairman Jerome Powell has consistently staved off any speculation about when the body may reverse course and shave points off its benchmark rate.
Michael Gapen, chief economist at Bank of America, told The Associated Press that persistent inflation in the service sector “fits the ‘wait and see and be careful’ narrative that the Fed is constructing.”
“In terms of building confidence that you’re in a disinflationary environment and opening the door to cuts, I think you have to say, well, we need more time to assess where services inflation is is going,” Gapen said.