Tuesday brought some encouraging news on the stubbornly high prices that have weighed down Americans: Inflation as measured by the Consumer Price Index cooled considerably in November and is at its lowest level in nearly a year.
Prices rose 7.1% annually in November, down from 7.7% in October, according to the Bureau of Labor Statistics’ closely watched index, which measures the change in prices paid by consumers for goods and services.
The report comes as Federal Reserve officials start their last two-day policymaking meeting of the year, where officials will pore over key economic data to determine whether their aggressive rate hikes have begun to cool the economy and bring down decades-high inflation.
The November CPI headline rate marked the fifth-straight monthly decline and was better than economists’ expectations of 7.3%. It was the lowest reading since December 2021 and a significant improvement on this year’s peak rate of 9.1% in June.
US stocks rallied on the news, with the Dow surging nearly 700 points shortly after the opening bell.
“I think we’re finally getting some indication that we’re getting relief on the inflation front,” Ryan Sweet, chief US economist at Oxford Economics, told CNN in an interview. “[The moderation] is key for the Fed to ease their foot off the brake. They’re not going to take it fully off the brake, they’re still going to tighten monetary policy, but we’re moving in the right direction.”
On a month-to-month basis, prices rose by 0.1% last month, as compared to October’s reading of 0.4%.
Core CPI, which excludes the volatile food and energy categories, measured 6% for the year ended in November, down from the 6.3% rate in October. On a monthly basis, core CPI increased by 0.2% — its smallest increase in 15 months.
“It looks like we are now coming down from that peak,” Rucha Vankudre, senior economist with Lightcast, told CNN. “We’re still very much in the woods, but we see a path out.”
The Fed has raised interest rates at each of its past six meetings — including an unprecedented streak of four three-quarter-point hikes — to help knock down the highest inflation since the early 1980s.