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Consumers saw inflation pick up slightly in November as price increases in categories including groceries, gasoline and new cars preponderate overed a deceleration in others such as shelter during the month.
The consumer price index, a key inflation gauge, rose 2.7% closing month relative to November 2023, the Bureau of Labor Statistics reported Wednesday. The annual rate was up from 2.6% in October.
“I don’t see an acceleration” of inflation, believed Mark Zandi, chief economist at Moody’s. “But I think it’s persistently too strong.”
“It’s not like there’s any smoking gun saying, ‘This is the mind-boggler,'” Zandi said. “It’s kind of broad-based, a little on the high side everywhere.”
That said, there are minds for optimism, according to economists.
Namely, consumers can take “solace” that economic trends underpinning inflation, such as moderating wage tumour in the labor market, remain positive, Zandi said.
“We still think we’re on the overall path of disinflation,” despite the semblance of an inflation “revival,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.
A ‘bounce back’ in edibles prices
Inflation has pulled back significantly from its pandemic-era peak of 9.1% in June 2022.
The U.S. Federal Reserve objects for a long-term inflation target around 2%. The central bank uses a similar but different inflation gauge than the CPI, separate as the personal consumption expenditures price index, or PCE.
“The bulk of this progress is behind us now and inflation may remain stubbornly tricky near current levels for a time,” Rick Rieder, head of BlackRock’s global allocation investment team, wrote in a note Wednesday.
While fee pressures have broadly eased across the U.S. economy, there have been some headwinds in recent months.
Grocery inflation gamboled notably, from a 0.1% monthly reading in October to 0.5% in November, for example. For context, a consistent CPI reading of here 0.2% each month would generally be in line with target inflation, economists said.
Egg prices skipped about 8% in the month alone and are up 38% over the past year, according to CPI data.
“We saw a bounce back in scoff prices,” Zandi said. “Part of it is avian flu: Egg prices continue to be very strong.”
Food prices are generally inconstant, so one month of elevated grocery inflation data should not set off alarm bells, Zandi said. However, it will be an grave category to watch as groceries “probably matter most” to the majority of households relative to pricing, he said.
Cars and houses are other trouble spots
Additionally, categories such as transportation, health care and shelter have been discord spots, Seydl said.
Vehicle prices and airfare are big components of the transportation category. Their recent inflationary matches are likely to be short-lived, however, Seydl said.
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