The Consumer Price Index (CPI) jumped 7.1% between November 2021 and November 2022, as stated in a report issued Tuesday from the Bureau of Labor Statistics, highlighting that inflation has continued its trend to slow down during harsh contractionary policy from the Federal Reserve.
The month-over-month increase of 0.1% was well below the forecasts for analysts, while core inflation, which factors out the more volatile food and energy categories, jumped only 0.2%. A spike in food prices of roughly 0.5% and an increase in shelter prices of 0.6% added to the headline number as energy prices dropped by 1.6%.
As of this past November, year-over-year inflation was far lower than the previous month’s levels of 7.7%. Energy costs dropped from their mountaintop earlier this summer.
Federal Reserve policymakers have been tediously tracking data information in regard to inflation and employment as officials reverse almost three years of highly aggressive monetary stimulus, including close to zero target federal funds rates and the buying of government securities from market actors. Policymakers have spiked rates by close to Three-quarters of a percentage point on four different occasions consecutively, leading to extreme volatility in the housing market and spiking the cost of all borrowed funds for businesses and consumers alike.
Greg McBride, the Chief Financial Analyst for Bankrate, issued predictions which stated that centraol bankers will once again bump up target interest rates by roughly half a percentage point as soon as their next meeting. “They will still be raising interest rates now and into 2023,” he stated. “The ultimate stopping point is unknown, as is how long rates will stay at that eventual destination.”
The choice to push rates up by three-fourths of a point instead of the expected quarter-point standard pace had not been made in close to thirty years before this, let alone across four consecutive years. McBride stated that the months ahead will see the Federal Reserve raising rates “at a more customary pace.”
Throughout this mess, Americans have been made to rely on credit card debt and the use of their previous stashed savings to battle the worsening pressures.
“Credit card rates are at a record high and still increasing. Auto loan rates are at an 11-year high, home equity lines of credit are at a 15-year high, and online savings account and CD yields haven’t been this high since 2008,” stated McBride. “Consumer borrowing and savings rates will climb further. Pay down costly credit card debt and boost emergency savings to better weather whatever may lie ahead economically.”
