Inflation rose in November at the fastest pace in four months, marking the second straight month of acceleration. The Department of Labor reported Wednesday that the consumer price index (CPI) increased by 2.7% over the past year, matching economists’ forecasts. Core inflation, which excludes food and energy prices, climbed 3.3% year-over-year.
On a monthly basis, overall prices rose 0.3%, the sharpest increase since March. If sustained, this monthly rate would annualize to a 3.8% inflation rate. Core prices also rose 0.3% in November, matching the fastest pace seen in eight months.
The inflation uptick coincides with signs of growing consumer and business optimism following the U.S. presidential election. Data from the University of Michigan and the Conference Board show increased consumer confidence, while the National Federation of Independent Business reported record gains in small business optimism last month.
Economic resilience is another factor fueling inflation. The labor market exceeded expectations in November, adding more jobs than forecasted. The Atlanta Federal Reserve’s real-time measure of economic performance suggests GDP growth could reach 3.3%.
This acceleration in inflation follows the Federal Reserve’s decision to cut interest rates in September. Critics argue the move may have been premature and has contributed to price pressures. Despite these concerns, the Federal Reserve is still widely expected to implement another rate cut during its upcoming meeting next week.
The combination of rising inflation and a strong labor market poses challenges for policymakers, as they balance economic growth with the risks of overheating. Analysts will be watching closely to see how the Fed navigates this environment in the coming months.
