Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in November on a seasonally adjusted basis, after increasing 0.4 percent in October. The index for shelter was by far the largest contributor to the monthly all-items increase. The indexes for shelter, communication, recreation, motor vehicle insurance, education, and apparel were among those that increased. Over the last 12 months, the all-items index increased by 7.1% before seasonal adjustment down from October’s 7.7%.
Is the hawkish behavior from the FED finally paying off? Only time will tell but at least for now, in the United States, we are seeing a slowdown in the inflation rate as November’s data showed a 0.1% increase and over the last 12 months, a 7.1% inflation rate. After rising by 0.6 percent in October, the food index climbed by 0.5 percent in November. Four of the six main food group indexes for grocery stores grew during the course of the month. While the index for meats, poultry, fish, and eggs decreased by 0.2 percent, the index for fruits and vegetables rose by 1.4 percent. November saw a 0.1 percent drop in other household food.
After increasing by 1.8 percent in October, the energy index decreased by 1.6 percent in November. Following a 4.0 percent spike in October, the gasoline index decreased by 2.0 percent throughout the course of the month. (Prices of gasoline decreased by 3.6 percent in November before seasonal adjustment.) After plummeting 4.6 percent in October, the natural gas index fell again this month, this time by 3.5 percent. In November, the electricity index fell by 0.2%. The energy index increased 13.1% in the last 12 months. Over the period, the fuel oil index jumped 65.7%, while the gasoline index increased by 10.1%. Over the previous 12 months, the index for electricity jumped by 13.7%, while the index for natural gas increased by 15.5%.
Despite the good news, it is expected that the FED will increase interest rates by half a percentage point as it tries to contain the inflation rate to its targeted 2%, this hawkish behavior may nonetheless come at the price of a sustained period of economic slowdown or contraction to get to their target.
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