U.S. Consumer Price Index (November 2024)

Headline inflation ticks higher in November, while core holds steady  

• The Consumer Price Index (CPI) rose 0.3% month-on-month (m/m) in November, after rising 0.2% m/m in each of the previous four months. On a twelve-month basis, CPI ticked up to 2.7% (from 2.6% in October). 
  • Energy prices rose 0.2% m/m, led by an uptick in prices at the pump (+0.6% m/m), while food prices rose 0.4% m/m, following a gain of 0.2% m/m in October. 
• Excluding food and energy, core inflation rose 0.3% m/m, matching the monthly gain in each of the prior three prior months, and in line with the consensus forecast. The twelve-month change held steady at 3.3% while the three month-annualized ticked up to 3.7%. 
• Price growth on core services were up a 'soft' 0.3% m/m (0.28% unrounded), following a 0.35% m/m gain in October. On a year-ago basis, services prices were up 4.6% or roughly two percentage points above its pre-pandemic pace of growth when inflation was running closer to 2%.  
  • Primary shelter costs rose 0.2% m/m, the slowest monthly gain since April 2021, as both rent of primary residence (+0.2% m/m from 0.3% m/m) and owners' equivalent rent (+0.2% m/m from 0.4% m/m) decelerated last month. On a 12-month basis, primary shelter remains elevated at 4.8%, but is well off its 2023 high of over 6%. 
  • Non-housing services inflation (aka "supercore") remained firm, rising 0.4% m/m. The uptick was largely driven by a sharp rise in lodging away from home (+3.2% m/m) and still firm price growth for recreation (+0.7% m/m) and medical care (+0.4% m/m) services. Other areas of past inflationary pressure including airfares and vehicle insurance were relatively negligible in November.  
• Core goods prices rose 0.3% m/m – its strongest monthly gain in 17 months – following a flat reading in October. New and used vehicle prices (up, 0.6% and 2.0%, respectively) were a major contributor to last month's gain. 

Key Implications

• The November CPI report provided further evidence that inflation progress is becoming much more incremental, suggesting the Fed's fight of returning 2% inflation is far from over. However, the cooling in shelter inflation was at least one piece of encouraging news, particularly after having unexpectedly turned higher in October.  
• At this point, markets have fully priced another 25-basis point rate cut at the Fed's upcoming meeting on December 17-18. But with inflation progress showing signs of stalling and some of the incoming administration's policy proposals (including the potential for tariffs and tax cuts) likely to further add to inflationary pressures, the Fed is likely to slow the pace of rate cuts and proceed much more cautiously in 2025.  

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