U.S. Consumer Prices Rise Slightly in November

NEW YORK (Reuters) – U.S. consumer prices increased slightly more than expected in November as energy costs rose, indicating an inflation trend aligned with the Federal Reserve’s perspective for a slower rate cut path this year.

The consumer price index (CPI) rose 0.4% last month after increasing 0.3% in November, according to the Labor Department’s Bureau of Labor Statistics on Wednesday. Over the 12 months through December, the CPI advanced 2.9%, up from 2.7% in November.

Economists polled by Reuters had estimated a monthly increase of 0.3% and a year-on-year rise of 2.9%.

Market Reaction:

• Stocks: U.S. stock index futures jumped, with S&P 500 E-minis up 89 points, or 1.5%.
• Bonds: The 10-year U.S. Treasury yield dropped by 12.1 basis points to 4.667%, while the two-year yield decreased by 9.1 basis points to 4.274%.
• Forex: The dollar index weakened, falling 0.4% to 108.76.

Comments from Experts:

Robert Pavlik, Senior Portfolio Manager, Dakota Wealth:

“The numbers came in better than expected. This provides reason to believe the economy can improve and that inflation can at least decrease slightly. Although some prices are volatile, this report appears beneficial.”

Brent Schutte, Chief Investment Officer, Northwestern Mutual:

“Fears of inflation pressures impacting the Fed’s rate decisions have eased somewhat. While core CPI remains stuck around 3.3%, this report offers some relief, though it doesn’t suggest any imminent easing.”

Brian Jacobsen, Chief Economist, Annex Wealth Management:

“Core inflation is slightly lower, but high energy prices persist. The Fed may not react too strongly to this report. It remains focused on rebuilding credibility in its inflation management.”

Peter Cardillo, Chief Market Economist, Spartan Capital:

“The overall numbers are somewhat disappointing due to food prices, but the cooler core inflation is good news. The outlook for inflation remains steady.”

Oliver Pursche, Senior Vice President, Wealthspire Advisors:

“Good inflation prints indicate that the Fed may act to lower rates when desired, aligning with a stronger economy and reduced inflation.”

Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management:

“The market will likely respond positively to easing core inflation, alleviating pressures on stock and bond markets as investors had worries over the Fed’s future interest rate paths.”

Tina Adatia, Head of Fixed Income Client Portfolio Management, Goldman Sachs:

“While today’s softer core CPI reduces concerns over rapid inflation, more positive data will be needed before the Fed considers further rate cuts.”