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Consumer price inflation cooled quickly last month as the declining prices of gas, used cars and medical insurance helped drive inflation down to a 7.1 percent rise year over year, the slowest pace this year.
Prices rose by a mere 0.1 percent from October to November, including a 0.2 percent hike in a core inflation measure that excludes volatile food and energy prices, according to the latest consumer price index report from the U.S. Bureau of Labor Statistics.
These monthly price changes are closer to normal inflation levels than what the U.S. economy has experienced for the past year-plus. The price hikes that occurred over the previous 12 months remain remarkably high by historical standards, but they’re a product of an economy where price hikes have been cooling off for months.
This 7.1 percent year-over-year price increase was down from the 7.7 percent annual rate recorded the month before and well under this year’s highest annual inflation rate of 9.1 percent during the 12-month period ending in June.
Stocks traded higher Tuesday morning, with some investors taking the report as a sign the Federal Reserve may not need to take quite as many invasive steps in the coming months to bring inflation back under control.
The slowdown comes even as measures of housing costs remain persistently high. The cost of renting a primary residence rose 0.8 percent from October to November, roughly in line with its monthly increase from two months prior. Owners’ equivalent rent of a primary residence rose by 0.7 percent.
These government estimates of housing costs often trail the underlying price conditions in the housing market. Rents have been creeping down for months as have home prices, factors that have yet to be reflected in the consumer price index’s estimate of housing costs for the typical resident.
Meanwhile, other big household budget items whose prices boomed over the past year have begun to fall.
Consumers spent 2 percent less per gallon to fill up at the pump in November than they did the month before, and home gas utility bills declined by 3.5 percent. Used cars and trucks sold for 2.9 percent less. And medical insurance was 4.3 percent less costly.
These areas proved to be a boost to household budgets in a month where a number of other key spending categories remained high and on the rise. The cost of groceries rose by half a percentage point from October to November.