December 11, 2024
Inflation is definitely starting to trend in the wrong direction.
That’s according to the latest consumer price index report released this morning. It found in the month of November the price index for every single thing we eat, use, and buy increased 2.7% over November of 2023. That’s hotter than the year-over year number in October when it was 2.6% and definitely above the September year over year number of 2.4%.
See – that increase is not what the federal reserve wants to see. They wanted to see it going in this direction. Now – 2.7% is definitely better than the recent peak in inflation from June of 2022 when it was 9.1% but the Fed wants to see that number at 2%. Not 2.4 or 2.6 and certainly not 2.7.
I’m going to tell you what’s causing that increase and how it’ll impact your wallet in a second but first – you should know that the federal reserve is going to meet next week to determine what they should do with interest rates. And that’s also going to impact your wallet. Because those interest rates determine things like your credit card rates, your personal loan rates and new mortgage rates. Most economists say – even with inflation increasing – when you balance that with the jobs report and other recent economic reports – that they believe the fed will still cut interest rates by a quarter percent next week. But no one knows for sure until the announcement is made and the fed could also see something in the numbers and reports that those economists aren’t seeing and they could choose instead to keep the rates steady and not cut them.
Now – let’s talk about what’s causing this increase in inflation – the cost of shelter. It’s up – again — to 4.7% from November of 2023. The bureau of labor statistics says the increase in shelter accounts for almost 40% of the increase in overall inflation.
Food overall is up year over year (2.4%) and also month over month (0.4%).
No surprise during the Thanksgiving holiday – we saw increases in airfare – which was up both month over month (0.4%) and year over year (4.7%) and while gas prices between November 2024 and November 2023 are down 8.1% they’re up between October and November (+0.6%). Speaking of cars – we started to see the index for used cars and trucks increase month over month in October (+2.7%) – and that continued again in November that number went up again by 2%. But when you compare the November number from 2024 to November of 2023 – used cars and trucks are still 3.4% percent less.
The fact remains – right now – inflation is stubborn. And this report makes clear that when president elect Trump takes over – he’s going to be dealing with this same stubborn inflation. As I have said repeatedly – no one can waive a magic wand and make it go away without literally crashing the economy. Getting it down without triggering a recession is a delicate process and it may threaten to complicate Trump’s plans to lower taxes and raise tariffs… policies that could increase inflation.
Read the CPI report here.
