US Inflation Continues to Decline | tagesschau.de

Inflation continues to ease in the US as energy prices fall. In November, consumer prices rose 3.1 percent. However, core inflation excluding energy and food prices has remained stubborn.

In the US, inflationary pressures continue to ease. In November, consumer prices rose 3.1 percent from the same month last year, slightly slower than the 3.2 percent in October, the U.S. Labor Department said. Inflation stood at 3.7 percent in September.

The year-over-year decline is primarily due to falling energy prices. This is 5.4 percent lower than in November 2022. However, food prices rose by 2.9 percent, while household costs rose by 6.5 percent.

“The decline in inflation remains a difficult process,” commented economist Bastian Hepperle from private bank Hauck Aufhäuser Lamp. “The core inflation rate, which is very high, is particularly stubborn,” Hepperle said. This so-called core rate, excluding volatile energy and food prices, was 4.0 percent.

Interest rate expectations Too optimistic?

Financial markets’ rate cut expectations may be premature as the US Federal Reserve is particularly focused on the key rate. “It is for this reason that Federal Reserve Chairman Jerome Powell may squash hopes of an early interest rate cut in the first quarter of 2024,” said Thomas Kitchell, chief economist at VP Bank.

The central bank recently left its key interest rate unchanged at 5.25 to 5.50 percent for two meetings in a row. It is expected to be quiet again when the interest rate decision comes out on Wednesday. Markets expect four interest rate cuts in the coming year. “An interest rate cut until mid-2024 is not realistic,” commented Commerzbank economists Christoph Balz and Bernd Weidensteiner.