U.S. Annual Inflation Rate Increases to 2.7% in November 2024
Washington, D.C., Wednesday, 11 December 2024.
The U.S. inflation rate rose to 2.7% in November 2024, driven by shelter costs and aligning with market expectations, impacting Federal Reserve rate cut considerations.
Key Inflation Drivers
According to the Bureau of Labor Statistics’ latest report, the Consumer Price Index (CPI) increased by 0.3% month-over-month in November [1]. Shelter costs were particularly influential, accounting for approximately 40% of the total monthly increase [1]. The core CPI, which excludes volatile food and energy prices, maintained a steady annual rate of 3.3% [1][3], indicating persistent underlying inflation pressures.
Sector-Specific Price Changes
Several key sectors contributed to the November inflation figures. Food costs rose by 0.4% monthly and 2.4% year-over-year, while energy prices showed a modest 0.2% monthly increase but remained 3.2% lower than the previous year [1]. The automotive sector saw notable increases, with used vehicle prices jumping 2% and new vehicle prices rising 0.6% monthly [1], reversing recent downward trends.
Federal Reserve Implications
The latest inflation data comes at a crucial time as Federal Reserve officials prepare for their policy meeting next week. Markets are showing strong confidence in an upcoming rate cut, with traders calculating a 96% probability of a quarter-percentage-point reduction [1]. This potential rate adjustment would mark a significant shift in monetary policy, coming after the Fed’s aggressive tightening cycle to combat inflation that peaked at 9.1% in mid-2022 [5].
Economic Impact and Outlook
The inflation report has immediate implications for American workers, as real wages when adjusted for inflation remained flat for the month [1]. Looking ahead, market analysts are closely monitoring the Federal Reserve’s response, with expectations centered on a potential rate cut at the December 18 meeting [1][4]. The persistence of inflation above the Fed’s 2% target [1] suggests that policymakers will need to maintain a delicate balance between controlling price pressures and supporting economic growth.