about 1 year ago • 2 mins
Data out on Tuesday showed that US consumer price rises were pretty teeny last month.
What does this mean?
Economists were careful not to get their hopes up when October's surprisingly mild inflation data broke, but with November's numbers coming in low too, this is starting to look like a trend. Check it out: prices for energy and used cars – major culprits in this year's inflation boom – fell by a tidy 1.6% and 2.9% last month from the one before. Add in sliding medical and transport costs, and you get an overall cooldown in price rises that offset the upticks in food and shelter. And getting down to brass tacks, even "core inflation” – which excludes the volatile stuff like food and energy – came in below expectations. So at the end of the day, prices were up just 0.1% from October and 7.1% versus the year before – the lowest annual reading we've seen in a year.
Why should I care?
The bigger picture: Take a hike, hikes.
Inflation’s still miles above the 2% target set by the Federal Reserve (the Fed), but this report will have come as a minor Christmas miracle for the central bank all the same. Folk already expected the Fed to drop this week’s rate hike to 0.5 percentage points, and this data gives it all the more reason to ease up: in fact, some economists think the Fed might even consider pausing hikes by early next year if this trend continues.
Zooming out: It’s the thought that counts.
The prospect of prices settling down might suggest that this year’s festivities have been saved – but inflation could still be the Grinch that stole Christmas. A survey out this week showed that 60% of shoppers are planning to buy fewer gifts this year, and the vast majority will be putting their Christmas presents on the tab: 60% are using credit cards to fund their generosity, with another 22% relying on buy-now-pay-later services.
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