Inflation increased by 0.2 percent in November but year-over-year inflation remains above the Fed’s target
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The Consumer Price Index (CPI) report for November showed a 0.2 percent increase in inflation across all sectors, lower than market expectations. But the lengthy government shutdown kept the Bureau of Labor Statistics (BLS) from collecting the full range of data in October, and the agency said it could not go back and collect the missing data.
Senior Economist Ryan Young said:
“Inflation is still above target, and likely won’t be coming back down in the near future. Not only are tariffs still working their way through supply chains, but the Fed’s recent policy decisions and presidential pressure for easier money will put upward pressure on inflation through at least next year.
“The Fed will soon begin growing its balance sheet, which is another way of saying it is growing the money supply. This will do more to raise inflation than its interest rate cuts. Meanwhile, President Trump is set to make Fed Chairman Jerome Powell a lame duck as soon as possible, while stacking the Fed’s political appointees with inflation doves who will be more aligned with the President’s monetary vision. Covid-era 9 percent inflation likely isn’t in the cards for 2026, but neither is 2 percent inflation.”
Finance and Monetary Policy Analyst Steve Swedberg said:
“Today’s CPI report shows a modest change in month-to-month inflation, suggesting short-term stabilization. However, year-over-year inflation remains above the Federal Reserve’s 2 percent target, indicating that consumer prices are still higher than the Fed considers healthy. Last week’s interest rate cut by the Fed could encourage more spending and borrowing, as lower rates make it easier for businesses and consumers to take on more debt while costs remain elevated. Policymakers should keep a close eye on price trends, especially since inflation seems stickier than usual.”
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