CPI report

Certain prices are starting to fall in the U.S. according to CPI inflation data. This may encourage the Fed to soften its approach to higher rates in the ...

Also, a large portion of rising prices is due to housing costs given their large weight in the CPI. So the general picture is that inflation is still very high and well above the Fed’s target. Food prices are still rising sharply in aggregate, but perhaps these increases are slowing. The reason for this is the statistical details of how the CPI series is calculated, making it more of a lagging indicator of house prices over recent months. In fact, the pace of increase accelerated in the November report as was the largest monthly rise since November 1990. These falling prices can help offset those prices that are still rising and help bring inflation down. Food prices may be starting to ease. This is welcome news as rising food prices hit those on lower incomes disproportionately. If and when it does that may help push inflation lower. These were low enough to cause the year-over-year inflation rate rate to fall to 7.7%. This is just one month of price data, but contained a lot of hints that suggest U.S. Still, we have some way to go before inflation hits the Fed’s 2% goal.