US inflation/ November inflation 2024/ Fed interest rates/ core inflation/ economic growth/ WASHINGTON/ Newslooks/ J. Mansour/ Morning Edition/ US inflation rose to 2.7% in November, slightly up from October’s 2.6%, driven by higher prices for used cars, hotel rooms, and auto insurance. Core inflation remained stable at 3.3%. As the Federal Reserve prepares to meet next week, it is expected to lower rates further, a move aimed at sustaining economic stability despite public concerns about elevated prices.
US Inflation Trends Quick Looks
- November Inflation Rate: Consumer prices rose 2.7% annually, up from 2.6% in October.
- Core Inflation Stability: Excluding food and energy, core prices increased by 3.3%, unchanged from the prior month.
- Fed Interest Rate Moves: Rate cuts likely to continue to sustain economic momentum.
- Economic Growth: The economy grew at 2.8% in Q3 2024, supported by consumer spending.
- Future Inflation Risks: Potential tariffs by President-elect Trump could push inflation higher.
US Inflation Rises Slightly as Fed Rate Decision Looms
Deep Look
Inflation in the United States edged slightly higher in November, driven by rising costs for used cars, hotel accommodations, and auto insurance, according to data released by the Labor Department. The annual inflation rate climbed to 2.7% from October’s 2.6%, while core inflation, which excludes food and energy costs, held steady at 3.3%. These figures reflect a modest increase compared to previous months, far below the peak inflation rate of 9.1% recorded in June 2022.
From a monthly perspective, consumer prices rose by 0.3%, marking the largest jump since April. Core prices also experienced a 0.3% increase for the fourth consecutive month. These numbers arrive ahead of a pivotal Federal Reserve meeting where policymakers are expected to announce a quarter-point rate cut, continuing their recent trend of lowering interest rates to sustain economic growth.
Fed’s Rate Decisions and Economic Landscape
The Federal Reserve has already implemented two rate cuts in 2024—a half-point reduction in September and a quarter-point decrease in November—bringing its benchmark rate to 4.6%. This figure is a notable decline from its four-decade high of 5.3% earlier in the year. Chair Jerome Powell and other Fed officials have emphasized the need to recalibrate rates to better align with the current, more subdued inflationary environment.
Despite these rate cuts, inflation remains a persistent issue for many Americans. Prices are roughly 20% higher than they were three years ago, a factor that has contributed to widespread public dissatisfaction. This economic unease played a significant role in President-elect Donald Trump’s recent victory over Vice President Kamala Harris in the November election.
Economic Resilience Amid Concerns
The U.S. economy continues to display resilience, growing at an annualized rate of 2.8% during the third quarter of 2024. Consumer spending has been a key driver of this growth, supporting the Fed’s decision to pursue gradual rate reductions. However, some analysts argue that further cuts may be unnecessary, given the economy’s solid performance.
Meanwhile, hiring has slowed slightly, raising concerns about potential economic weakening in the months ahead. This risk underscores the importance of the Fed’s efforts to strike a balance between stimulating growth and containing inflation.
Potential Challenges Ahead
A looming challenge to the Fed’s inflation management strategy comes from President-elect Trump’s proposal to implement sweeping tariffs on U.S. imports. Economists warn that such tariffs, including a 10% levy on all imports and a 60% tariff on goods from China, could reignite inflationary pressures. Goldman Sachs forecasts that core inflation could rise to 2.7% by the end of 2025 if these tariffs are enacted, compared to an estimated 2.4% without them.
Looking Forward
As the Federal Reserve concludes its meeting next Wednesday, it is expected to not only announce its interest rate decision but also update its economic projections. Policymakers previously projected four rate cuts for 2025, a figure likely to be revised in light of evolving economic conditions.
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