CPI rose 2.7% With No Surprise, Strengthens Fed Rate-Cut Outlook
1min read The latest Consumer Price Index (CPI) report for November offered no major surprises, aligning closely with economists' expectations. This stability in inflation data further solidifies market bets on a Federal Reserve rate cut in the near future.
CPI and Core Inflation: Stable but Watchful
In November, the CPI rose 2.7% year-over-year, slightly above October's 2.6% but in line with forecasts. On a monthly basis, prices increased by 0.3%, consistent with economists' estimates and marking a slight acceleration from October's 0.2% rise.
Core CPI, which excludes volatile food and energy prices, showed steady growth. It rose 0.3% month-over-month, mirroring October's increase, and climbed 3.3% year-over-year for the fourth consecutive month. Used car prices stood out, rising 2% in November, reflecting a rebound in auction activity.
Market Reaction: Rate-Cut Bets Strengthen
Following the CPI release, markets priced in a 97% probability of a 25-basis-point rate cut at the Federal Reserve's upcoming meeting, up from 89% the day before.
Pre-market trading reflected this optimism: S&P 500 futures rose 0.4%, Nasdaq 100 futures climbed 0.6% and Gold prices increased by 0.6%, crossing the $2,700/ounce threshold.
Category Insights: Shelter Moderates, Food Stays Sticky
Shelter Costs Ease:
The shelter index rose 4.7% year-over-year, slightly below October's 4.9% increase. On a monthly basis, the index rose 0.3%, moderating from October's 0.4%. Rent and owners' equivalent rent both decelerated to 0.2% month-over-month increases.
Food Prices Remain Resilient
The food index increased 2.4% year-over-year, with a monthly rise of 0.4%. Breaking it down, Food at home: Up 0.5%, a notable acceleration from October's 0.1% increase, Food away from home: Climbed 0.3%, maintaining steady growth.
Energy Modest Rebound
The energy index edged up 0.2% month-over-month after remaining flat in October. Year-over-year, energy prices fell 3.2%, a less pronounced decline than October's 4.9% drop.
Other Notable Changes
Recreation, education, personal care, and apparel indexes all showed modest monthly increases.The communication index declined 1%, following drops of 0.6% in both October and September.