Prices climbed 2.7% in November compared to a year earlier.
Prices climbed 2.7% in November compared to a year earlier.
Inflation dropped in November, ending a monthslong acceleration of price increases and offering relief for households strained by cost hikes, government data on Thursday showed. The reading came in below economists’ expectations.
Consumer prices rose 2.7% in November compared to a year earlier, marking a notable reduction from 3% year-over-year inflation in September, the most recent month for which complete data is available. Inflation stands at its lowest level since July.
The report offered the first look at price increases in nearly two months, after the 43-day government shutdown impaired data collection.
Despite an overall reduction of inflation, some high-profile items like coffee and beef continued to soar in November.
Coffee prices jumped nearly 19% in November compared to a year earlier, while beef prices climbed almost 16% over that span.
Egg prices plummeted in November, however, falling 13% compared to the previous year.
The federal government issued partial price data for October, but the release did not include a figure for the overall rise in prices that month, since officials failed to collect sufficient information during the government shutdown, the Bureau of Labor Statistics (BLS) previously said in a statement.
The latest snapshot of price increases comes at a wobbly moment for the U.S. economy, landing in a period marked by sluggish hiring and elevated inflation.
Two major economic data releases earlier this week flashed warning signs, some analysts previously told ABC News.
The U.S. added 64,000 jobs in November, which marked a significant decline from 119,000 jobs added in September, the most recent month for which complete data is available, the BLS said in a jobs report on Tuesday.
The unemployment rate ticked up to 4.6% in November from 4.4% in September. Unemployment remains low by historical standards but has inched up to its highest level since 2021.
A retail sales report on Tuesday also sounded a cautionary note about consumer spending, which accounts for about two-thirds of U.S. economic activity. Retail sales were left unchanged in October from September, meaning performance remained flat despite the ramp-up of the holiday season, U.S. Census Bureau data showed.
Last week, the Federal Reserve cut its benchmark interest rate a quarter of a percentage point in an effort to boost the sluggish labor market. The move amounted to the third rate cut this year, bringing the Fed’s benchmark rate to a level between 3.5% and 3.75%.
Interest rates have dropped significantly from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
The Fed is stuck in a bind, since the central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.
The pressure on both sides of the Fed’s dual mandate presents a “challenging situation” for the central bank, Fed Chair Jerome Powell said at a press conference in Washington, D.C., last week.
“There’s no risk-free path for policy as we navigate this tension between our employment and inflation goals,” Powell added.
The Fed will meet again to adjust interest rates next month. The odds of interest rates being left unchanged stand at about 75%, while the chances of a quarter-point rate cut register at 25%, according to CME FedWatch Tool, a measure of market sentiment.