WASHINGTON–To the surprise of many, the pace of inflation eased in November, but economist are cautioning against reading too uch into the lates Consumer Price Index numbers, due to gaps in data collection resulting from the government shutdown, while a credit union economist said a January rate cut by the Fed remains iffy.
According to the Labor Department, CPI rose 2.7% in November from a year earlier. That was down from 3% in September and lower than the 3.1% forecasted by economists polled by The Wall Street Journal.
The core measure of prices, which strips out volatile food and energy costs, increased 2.6%. That was also lower than economists’ expectations.
CU’s Unique View
“Credit unions have a unique vantage point to see how their members are fairing in times of economic uncertainty, and right now decreased inflation for housing is a welcome sign for consumers looking to stretch their budgets,” Dawit Kebede, senior economist with America’s Credit Unions, said in a statement. “Both headline and core inflation came in lower than expected in November, with commodity prices excluding food and energy stabilizing and services declining relative to September. Housing inflation, a major component of services, came in unusually low over the last two months, raising questions about accuracy and potential distortions in the estimates due to the lapse in appropriations – concerns that the Federal Reserve Chairman Jerome Powell has also noted with caution. Despite these encouraging figures, market assessments of the probability of a January rate cut have remained largely unchanged following the report.”
As the Wall Street Journal noted, the November report didn’t break down month-over-month changes for October and November for most items, making it difficult to glean insights into the economy’s recent performance.
Increases, Decreases
According to the Labor Department, energy prices increased 4.2% over the year, lifted by a roughly 11% jump in fuel prices and a roughly 7% increase in electricity. Food was up 2.6% over the year. Prices for dairy products retreated.
Prices for goods including carpets, clothing, coffee and other tariff-exposed products are up sharply from where they would have been had there not been tariffs, according to a Harvard analysis of data from major U.S. retailers through October, the Journal said.
