US consumer inflation rises less than expected in November, at 0.1%

U.S. consumer prices rose less-than-expected in November amid falls in the cost of gasoline and used cars, leading to the smallest annual rise in inflation in nearly a year, which could pave the way for the Federal Reserve to start to reduce the size of its interest rate hike next Wednesday (14).

The consumer price index rose 0.1% last month, after advancing 0.4% in October, the Labor Department said on Tuesday (13). Economists polled by Reuters had forecast a rise of 0.3%.

In the 12 months through November, the Index rose 7.1%, the lowest rate since December 2021, showing a slowdown from the 7.7% rise seen in October.

The annual rate peaked at 9.1% in June, the highest since November 1981.

Annual inflation is coming down in part because last year’s big increases fall out of the equation. The Fed’s aggressive monetary policy stance is also dampening demand.

The report was published on the day that US central bank officials begin their last meeting of the year. The Fed – in the midst of the strongest rate hike cycle since the 1980s – is expected to raise the base rate by 50 percentage points on Wednesday, breaking a streak of four 75-point hikes.

Fed Chair Jerome Powell said last month that the central bank could slow the pace of increases “as early as December.”

Excluding volatile food and energy components, the core CPI rose 0.2% last month, after rising 0.3% in October. In the 12 months through November, the core increased by 6.0%, from 6.3% in October.

Economists predict the Fed will raise its key rate above the recently projected 4.6%, where it may remain for some time. They expect the central bank to raise its estimate for the so-called terminal rate on Wednesday.

The Fed raised the interest rate by a total of 3.75 points this year, from close to zero to a range of 3.75% to 4%.