Inflation Growth Is Slowing Down

The consumer price index, which tracks how much people pay for goods and services, increased 7.1% in November from a year earlier, according to the Labor Department on Tuesday. This is a considerable decrease from the 7.7% rise seen in October.

  • The rate increased in line with a pattern of lessening price growth since June's peak of 9.1%
  • Still, it remained significantly higher than the 2.1% average rate in the three years prior to the pandemic

Prices also decreased dramatically month over month, with falls in the cost of utilities, medical services, used cars, and fuel. While costs for new cars remained unchanged, price rises for restaurant meals were more restrained.

Wary Of The Fed

Following higher rises of 0.75 points at their last four sessions, the Fed lastly raised interest rates by 0.5 percentage points. This rate increase is the seventh in a row to slow the economy and combat inflation.

  • The Fed's deliberations over how much to hike rates early next year may become more difficult after two consecutive months of easing pricing pressure
  • During the press conference, Fed Chair Jay Powell adopted a hawkish approach and cautioned investors that “it will take substantially more evidence to give confidence that inflation is on a sustained downward path”

An updated "dot plot" of the interest rate forecasts made by each central bank official suggested support for additional tightening in 2023.

"Taken together, today's statement and economic projections tell a simple, but persuasive story: this Fed isn't prepared to 'pivot' in any meaningful way until it sees sustained and conclusive evidence of a reversal in inflationary pressures," Karl Schamotta, chief market strategist at Corpay

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Anne Preble on Unsplash.