The U.S. Bureau of Labor Statistics released its Consumer Price Index Summary on December 11, 2024, to poor news for U.S. inflation. After a few months of good news for U.S. inflation, the price index rose to 2.7%. The 12-month inflation is calculated by adding each month’s individual inflation number. In November 2024, prices rose 0.3%, bringing the 12-month total from December 2024-November 2024 to 2.7%.
Wins Slow
The last few months saw big consumer wins in energy prices, specifically in gasoline and fuel oil prices. These wins drove a slow in inflation, but unfortunately, gasoline and fuel oil increased by 0.6% after seeing price drops of 0.9% and 4.6% (respectively) in October.
All price categories, except for two, rose in November. Electricity saw a 0.4% price decrease, while medical care commodities dropped, 0.1%.
The biggest increases were seen in used cars and trucks (+2.0%) and utility (piped) gas service (+1.0%). Overall price increases were steady, and losing the gains from gasoline and oil hurt the overall numbers.
The Federal Reserve’s Plan
The Federal Reserve plans to slowly drop interest rates across the United States as inflation has cooled since 2021-2022. Announcing a second cut in a row on November 7th for 0.25%, the Federal Reserve made their position clear. Federal Reserve Chairman Jerome Powell stated that the labor market has cooled, which is fueling the interest rate cuts. The Fed looks to support the labor market through interest rate cuts, but if inflation continues to increase, it may slow, or even pause, its plan to drop interest rates. Chairman Powell has stated several times that it is important to move slowly and not overreact to negative economic news.
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