The US CPI fell by 1.7% in November while Core CPI came in flat, the Bureau of Labor Statistics reported today. Expectations had been for a 1.2% drop in headline CPI and a 0.1% increase in the Core number.
The decline in headline CPI is the largest MoM decline since records began in 1947 and it drags the YoY figure to just 1.1%, the smallest rate of consumer inflation since June 2002. The biggest monthly price reductions were seen in transportation and energy, down 9.8 and 17.0 percent respectively. Incidentally, both of these sectors sit firmly in negative territory for the last year. Energy is down by 13.3% and transportation by 8.9% in the 12 months ending November.
Core CPI now stands at 2.0% YoY, lower than the 2.1% that had been expected and below October’s 2.2% reading. It remains to be seen whether the Fed has already priced this reduction in consumer prices into its upcoming Federal Funds Rate announcement. At present time the consensus estimate is for a 0.50 percent cut by the Fed which will take the Federal Funds Rate down to just half of one percent.
**In the last few minutes it has been announced that The Fed has cut the Federal Funds Rate by more than expected to 0.25%, a 0.75% cut.**
Filed under Economic Indicators, United States by admin
