The cost of living continued to rise at levels unseen in decades in November, the US Bureau of Labor Statistics reported on Tuesday, but the rate of inflation does appear to be finally slowing.
The latest consumer price index (CPI) figures – which measure a broad range of goods and services – showed prices rising by 7.1% from last November with a 0.1% increase from October.
The latest annual rise was lower than expected and is down from 9.1% in June, the highest rate in more than 40 years, but is still more than three times higher than the Federal Reserve’s target rate of 2%.
The Fed has been hiking interest rates at their fastest pace since the 1980s as it seeks to slow the economy and bring prices down. It is expected to announce another rate rise on Wednesday, its eighth consecutive increase.
The latest dip in the rate of inflation was helped by falling gas prices – once one of the biggest drivers of rising prices. But US consumers continued to experience soaring costs for services such as healthcare, rents and eating out. Housing costs were by far the largest contributor to the monthly increase, more than offsetting decreases in energy indexes.
The Fed has also expressed concern about the continuing strength of the job market and rising wages – although average wage rises remain below the rate of inflation. Some critics have charged that the Fed has raised rates too high and too fast. Fed chair Jerome Powell said last month that the impact of the increases has yet to be felt. “Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said in a speech at the Brookings Institution.
However, economists still expect the Fed to announce another rate rise on Wednesday, albeit smaller than recent increases at a half point, after four straight three-quarter-point hikes. Powell said last month that the pace of increases would slow but that there was “more ground to cover” and rates were likely to stay higher for longer than the Fed first expected.
