U.S. inflation slowed again last month, the latest sign that price gains are gradually slowing despite continued pressure on U.S. households.
Consumer prices rose 7.1 per cent in November from a year ago, the government said on Tuesday. Down from 7.7% in October, down from a recent peak of 9.1% in June. It was the fifth consecutive deceleration.
The consumer price index rose just 0.1% in November from 0.4% in October.
The Federal Reserve plans to keep raising interest rates despite further easing in inflation last month. On Wednesday, the Fed is set to raise its benchmark interest rate for the seventh time this year, a move that will further raise borrowing costs for consumers and businesses.
Economists warn that the Fed will likely trigger a recession next year by continuing to tighten credit to combat inflation.
cheap gas, electricity, used cars
Inflation slowed in November as prices of petrol, electricity and used cars fell, according to a government report on Tuesday.
Some trends are beginning to lower price pressures, but they won’t be enough to quickly bring overall inflation back to levels Americans were accustomed to.
The national average for regular gas per gallon fell from US$5 per gallon in June to US$3.26 on Monday. Many of his supply chains also eliminate confusion and help reduce the cost of imports and parts.
Prices for timber, copper, wheat and other commodities have fallen steadily, tending to lead to lower construction and food costs.
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Some economists and the Federal Reserve have said inflation is well above the central bank’s 2% annual target and may not be achieved until 2024. is a sign of improvement.
Fed Chairman Jerome Powell said the Fed tracks price movements in three different categories to best understand possible paths for inflation. Housing, including rent and homeownership costs. Non-housing services such as auto insurance, pet services, and education.
In a speech in Washington two weeks ago, Powell said there had been some progress in easing inflation in goods and housing, but not in most services. Used cars, furniture, clothing and appliances. Prices of physical goods such as
Housing costs continue to rise
Used car prices, which surged 45% year-on-year in June 2021, have fallen for most of the year.
Housing costs, which account for nearly one-third of the consumer price index, are still on the rise. But real-time measures of apartment rents and house prices are starting to fall after recording a torrent of price increases at the height of the pandemic. Powell said those declines are likely to show up in government data next year and should help lower overall inflation.
Still, the cost of the service is likely to remain high, Powell suggested. Part of the reason is that the rapid rise in wages is becoming a major driver of inflation. Service businesses such as hotels and restaurants are particularly labor-intensive. And with average wages growing at a rate of 5-6% a year, this sector of the economy continues to put pressure on prices.
Service industries tend to pass on customers by charging higher labor costs, thereby perpetuating inflation. Higher wages also encourage more consumer spending, allowing businesses to raise prices.
“We want wages to rise significantly,” Powell said.
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On Wednesday, the Fed is expected to raise key short-term interest rates by half a percentage point. In that case, the benchmark interest rate would remain in the range of 3.75% to 4%, the highest level in 15 years.
Economists expect the Fed to slow its rate hikes further next year, raising rates by a quarter of a percentage point in February and March if inflation remains relatively subdued.
