WASHINGTON: US consumer inflation ticked up for a second consecutive month in November, driven by food prices and other sectors, according to government data published Wednesday, complicating the Federal Reserve’s rate cut deliberations.
The consumer price index (CPI) rose to 2.7 percent last month from a year ago, up slightly from 2.6 percent in October, the Labor Department said in a statement.
This was in line with the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal. “This data really underscores what a game of Whack-A-Mole getting inflation down has been for the Federal Reserve,” KPMG chief economist Diane Swonk told AFP.
The November inflation data is “just about good enough,” analysts at Evercore ISI wrote in a note to clients, adding it left the Fed on track to cut rates again at its next interest rate decision on December 17 and 18.
On a monthly basis, headline inflation rose 0.3 percent, propped up by housing costs. Several other indexes also edged higher, including food, energy, medical care and recreation, the Labor Department said.
Among the sharpest year-on-year increases was the cost of eggs, which has surged by 37.5 percent as the US has contended with avian flu. The back-to-back increases add to the challenges the Fed faces returning inflation to its long-term target of two percent, potentially slowing the pace of rate cuts over the coming months.
The Fed’s favored inflation gauge, the PCE price index, which differs slightly from CPI, also rose in October, underscoring the bumpy path back to two percent.
The US central bank recently began dialing back interest rates from a two-decade high, and its benchmark lending rate currently sits at between 4.50 and 4.75 percent, down three quarters of a percentage-point from September. The financial markets overwhelmingly expect the Fed to make another quarter point cut next week, according to CME Group data. But some analysts expect the Fed to be more cautious about cutting than markets expect.
“I still thinks its closer than financial markets have it priced in,” said Swonk from KPMG. This will be the last Fed rate decision before President Joe Biden, a Democrat, hands over the White House to incoming Republican Donald Trump.
In a statement, Biden’s top economic advisor attempted to paint the inflation data in a more positive light.
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