The Labor Department reports overall inflation dropped to 7.1% in November, the lowest overall rate since last December and further evidence that the red-hot U.S. economy may finally be cooling off.
November’s rate is down sharply from October’s 7.7% and inflation has been trending lower since hitting 9.1% in June.
The Consumer Price Index Summary released Tuesday morning shows the cost of shelter was by far the largest contributor to the monthly all-items increase, more than offsetting decreases in energy indexes. The food index increased 0.5% over the month with the food-at-home index also rising 0.5%. Overall energy costs decreased 1.6% over the month as the costs of gasoline, natural gas and electricity all declined in November.
The Labor Department reports November’s 7.1% year-over-year inflation rate was the smallest annual increase since December 2021. The inflation rate for all items minus volatile food and energy prices came in at 6.0% year-over-year.
Even as overall inflation reflects some easing, most basic necessities saw increases in the last month and are still significantly more expensive than this time last year.
In November, groceries were up 10.6% over last year, energy costs rose 13.1%, medical care services were 4.4% more expensive and costs related to shelter rose 7.1% since November 2021.
The Mountain West region, which includes Utah, saw inflation running at an annual rate of 8.3% in November, the highest regional rate in the country.
President Joe Biden offered remarks from the White House following the report’s release on Tuesday morning, calling the new numbers “welcome news” and noting U.S. inflation has been coming down the last five months and bucking international economic trends.
“In a world where inflation is rising at double digits in many major economies around the world, inflation is coming down in America,” Biden said. “Make no mistake, prices are still too high, we have a lot more work to do, but things are getting better, headed in the right direction.”
Last month, the Federal Reserve announced another jumbo .75% increase to its benchmark lending rate, marking the fourth straight increase of that size and sixth overall interest rate boost this year.
The aggressive strategy is aiming to quell inflation that has been running at or near 40-year highs for most of the past year. The rate hikes aim to raise the cost of debt for businesses and consumers which should, theoretically, reduce the amount of spending and overall economic activity, a shift in dynamics that typically brings inflation rates down.
But consumer spending has remained robust and the U.S. labor market has continued to run red hot, with unfilled jobs far outnumbering the number of available workers to fill them.
Tuesday’s inflation report may give the Federal Reserve Board, which is meeting this week to consider another increase to its benchmark rate, reason to assess a smaller hike this time around. Many economists believe the Fed will go with a .5% bump when it announces its decision Wednesday.
The national average for a gallon of regular gas has dropped from $5 a gallon in June to $3.26 as of Monday. Many supply chains have also unsnarled, helping reduce the costs of imported goods and parts. Prices for lumber, copper, wheat and other commodities have fallen steadily, which tends to lead to lower construction and food costs.
To some economists and Fed officials, such figures are a sign of improvement, even though inflation remains far above the central bank’s annual 2% target and might not reach it until 2024.
Fed Chairman Jerome Powell has said he is tracking price trends in three different categories to best understand the likely path of inflation: goods, excluding volatile food and energy costs; housing, which includes rents and the cost of homeownership; and services excluding housing, such as auto insurance, pet services and education.
A Deseret News/Hinckley Institute of Politics poll conducted in October found a whopping 93% of Utahns say they’re concerned about inflation, while only 6% say they’re not concerned.
More specifically, 64% said they’re “very concerned,” 29% said they’re “somewhat concerned,” 5% said they’re “not very concerned” and only 1% said they’re “not at all concerned.”
The number of Utahns citing inflation as a top worry has been on the rise since a July 2021 Deseret News poll that found 85% of Utahns were very or somewhat concerned about inflation and another check-in in February 2022 when 93% of survey participants registered concerns about the rising costs of goods and services.
October’s reading is only slightly down from September’s poll, which found 96% of Utahns said they were very or somewhat concerned about inflation and 4% were not very or not at all concerned.
Contributing: Associated Press