The Fed Has Its Final Data Point Before Rate-Cut Decision

Fueled by pricier used cars, hotel rooms, and groceries, inflation in the United States moved slightly higher last month in the latest sign that some price pressures remain elevated. Consumer prices rose 2.7% in November from a year earlier, up from a yearly figure of 2.6% in October. Excluding volatile food and energy costs, so-called core prices increased 3.3%, the same as in the previous month. Measured month to month, prices climbed 0.3% from October to November, the biggest such increase since April. Core prices also rose 0.3% for a fourth straight month. The Wall Street Journal reports the figures synced with economists' expectations. More:

• Final data point: Wednesday's inflation figures from the Labor Department are the final major piece of data that Federal Reserve officials will consider before they meet next week to decide on interest rates.
• Rate-cut expectations: The relatively mild November increase won't likely be enough to discourage the officials from cutting their key rate by a quarter-point, per the AP. The probability of a rate cut next week, as envisioned by Wall Street traders, rose to 96% after Wednesday's inflation report was released, according to futures pricing tracked by CME FedWatch. CNBC reports most expect there won't be a cut in January as the Fed "measure[s] the impact successive cuts have had on the economy."
• More on that: Fed officials have made clear that they expect inflation to fluctuate along a bumpy path even as it gradually cools toward their target level. In speeches last week, several of the central bank's policymakers stressed their belief that with inflation having already fallen so far, it was no longer necessary to keep their benchmark rate quite as high.

• Food prices rise: Though inflation is now way below its peak of 9.1% in June 2022, average prices are still about 20% higher than they were three years ago. Grocery prices jumped last month, an uncomfortable reminder for consumers that food prices remain a big drag on households' budgets. Beef prices leapt 3.1% just from October to November and are up 5% from a year earlier. Egg prices, which have been volatile for more than two years, in part because of bird flu, soared 8.2% just last month. They are nearly 38% higher than a year ago.
• Gas, rent, more: Gas prices ticked up 0.6% from October to November, ending a string of declines. Still, gas is down more than 8% from a year earlier. Hotel prices leapt 3.2% from October to November and are 3.7% higher than a year ago. But one key category that has been pushing prices up showed welcome signs of cooling in November: Rental prices ticked up just 0.2%, the smallest increase since July 2021.

(More inflation stories.)