In an exclusive interview with FOX Business Edward Lawrence, Federal Reserve Bank of San Francisco President Mary Daly talks next rate decisions, keeping the economy in a good place and potential impacts from a second Trump administration.
Inflation ticked higher again in November as prices remained stubbornly high for consumers, leaving Federal Reserve policymakers with fresh data to consider ahead of their meeting next week when another interest rate cut may be announced.
The Labor Department on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.3% in November while ticking up to 2.7% on an annual basis.
Those figures were in line with the expectations of economists polled by LSEG. Both the headline rate and monthly price growth figures were up compared with October’s readings, which were 2.6% and 0.2%, respectively.
So-called core prices, which exclude more volatile measurements of gasoline and food to better assess price growth trends, were up 0.3% on a monthly basis in November and 3.3% from a year ago – both of which were unchanged from last month’s readings.
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Inflation was up 2.7% on an annual basis in November. (Scott Olson/Getty Images / Getty Images)
The report showed that inflationary pressures in the U.S. economy remain persistent despite progress in bringing inflation closer to the Federal Reserve’s 2% target over the past year.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities and have less flexibility to save money.
Housing costs accounted for nearly 40% of the headline CPI gain in November, as the index for shelter increased 0.3% on a monthly basis. Shelter prices are up 4.7% from last year.
MAJORITY OF AMERICANS LACK ECONOMIC SECURITY, STUDY FINDS
Energy prices also rose 0.2% in November after they were unchanged in the prior month, and were down 3.2% from a year ago. Gasoline prices rose 0.6% on a monthly basis but are down 8.1% from last year. Electricity costs declined by 0.4% in November but are up 3.1% on an annual basis.
Food prices were also higher for the month of November, up 0.4% for the month and 2.4% over the last year. The cost of food at home was up 0.5% on a monthly basis and 1.6% compared with a year ago. Food away from home rose 0.3% for the month and was up 3.6% from last year.
Prices for meats, poultry, fish and eggs were up 1.7% for the month and 3.8% from a year ago. Egg prices rose 8.2% in November and are up 37.5% from last year due in part to a bird flu outbreak.
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Auto insurance prices are 12.7% higher than a year ago. (Keith Birmingham/MediaNews Group/Pasadena Star-News via Getty Images / Getty Images)
Prices for transportation services were flat on a monthly basis but are 7.1% higher than a year ago. Auto insurance is up 12.7% on an annual basis, though it rose just 0.1% compared with last month. Motor vehicle repair costs were up 0.5% on the month and are 7.8% higher than last year.
Postage and delivery services are up 9.8% from last year despite a decline of 0.1% in November. Postage costs are up 10.6% while delivery services are up 4.4% on an annual basis.
The data comes as the Federal Reserve is scheduled to meet next week when policymakers are expected to announce another 25 basis point cut to interest rates.
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Despite headline inflation rising relative to recent readings, markets don’t anticipate that deterring the Fed from cutting. As of Wednesday morning, traders see a 97.9% probability of a 25 basis point cut at the Fed’s December meeting – up from 88.9% a day ago, according to the CME FedWatch tool.
“CPI was a bit higher than anticipated but the underlying details were more favorable,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “Higher prices for new and used vehicles point to lingering hurricane effects on demand and supply, while housing costs showed the smallest increase since 2021. The data have given the Fed the “all clear” for next week, and today’s inflation data keep a January cut in active discussion.”
