US inflation ticked up slightly last month, fueled by higher prices for used cars, hotel rooms, and groceries. Consumer prices rose 2.7% in November from a year earlier, with core prices increasing 3.3%. The mild increase won’t likely deter the Federal Reserve from cutting interest rates next week, with the probability of a rate cut rising to 98%.
Federal Reserve officials consider Wednesday’s inflation figures before meeting to decide on interest rates. Despite concerns about persistent price pressures, Fed Chair Jerome Powell suggests that the economy is generally healthy and that the Fed can afford to be cautious. The job market has cooled, leading to slower growth in Americans’ paychecks.
Some companies, like World Emblem, are responding by providing smaller wage increases, aiming to offset costs through greater efficiencies. However, some categories, such as grocery prices, remain volatile, with beef prices jumping 3.1% and egg prices soaring 8.2%. Gas prices ticked up 0.6%, while hotel prices leapt 3.2%.
The Fed expects inflation to fluctuate along a bumpy path as it gradually cools towards its target level of 2%. Some analysts suggest that the US economy is in solid shape, making further interest rate cuts unnecessary. However, President-elect Donald Trump’s threat to impose tariffs on US imports could send inflation higher.
In response to potential tariffs, companies like World Emblem are planning to offset the impact through price increases and reductions in research and development. The Fed will continue to monitor inflation and adjust its policies accordingly as it seeks to “recalibrate” interest rates towards a lower setting.
Source: https://apnews.com/article/inflation-prices-interest-rates-economy-federal-reserve-223c3a826318d142e283839f9d8581a2