Consumer Price Index Expected to Show Modest Rise
A closely watched inflation report set to be released on Tuesday is anticipated to reveal a continued easing of price pressures within the economy. Economists predict that the consumer price index, which measures various goods including gasoline, healthcare, groceries, and rent, will indicate a 3% increase in monthly prices for November. This figure is slightly below the 3.2% rise recorded in the previous month. In terms of monthly inflation, it is expected to remain flat, much like October, largely due to a significant decline in gasoline prices. Mark Hamrick, senior economic analyst at Bankrate, notes that while Americans still feel the impact of post-pandemic inflation, the forthcoming consumer price index data should align with recent improving price trends, partly driven by last month’s substantial drop in gasoline prices.
Slower Retreat in Inflation Reflected in Other Report Findings
Other sections of the report are anticipated to indicate a slower decline in inflation. Core prices, which exclude more volatile measurements such as food and energy, are projected to increase by 0.3% or 4.1% annually. These figures remain largely unchanged from October, suggesting that underlying price pressures continue to remain strong. The Federal Reserve, with a target rate of 2%, closely observes this report to determine whether inflation is finally subsiding. Policymakers aim to cool the economy through a series of aggressive interest rate hikes. Since March 2022, they have approved 11 rate increases, raising the benchmark federal funds rate from near zero to the highest level since 2001. While another rate hike remains a possibility, it is widely anticipated that rates will remain steady for the third consecutive month at the final meeting of the year on Wednesday. Alongside inflation, central bank officials also consider job growth and consumer inflation expectations in their assessments.
Inflation Puts Pressure on American Families
Inflation has placed significant financial strain on the majority of U.S. households, who are now compelled to pay more for essential items like food and rent. Low-income Americans, in particular, bear a disproportionate burden as their already stretched paychecks are severely impacted by price fluctuations. Although inflation has decreased from its peak of 9.1%, comparing with January 2021 just before prices began to surge, the consumer price index has risen by a staggering 17.62%. Mark Hamrick emphasizes that despite this, over the past four years, the primary measure of retail-level inflation has risen by approximately 20%. As a result, both most Americans and the Federal Reserve are hesitant to declare victory in the fight against inflation.