The November U.S. Consumer Price Index (CPI) aligned with forecasts, but experts warn that inflation will likely decelerate slowly due to robust consumer demand.
According to Hanwha Investment & Securities, consumer prices rose 2.7% in November compared to last year’s period, while core inflation increased by 3.3%.
The Supercore CPI, which excludes energy and housing costs, continued its upward trajectory, rising 0.34% from the previous month. Used car prices increased by 2.0%, marking three consecutive months of growth. Food prices, particularly for items like beef and eggs, rose by 0.4%, reflecting a more pronounced upward trend.
Choi Kyu Ho, a Hanwha Investment & Securities analyst, noted that inflationary pressure on goods remains relatively moderate despite these increases. Excluding used cars, the prices of goods rose by only 0.1% month over month.
A slowdown in the Owners’ Equivalent Rent (OER, +0.2%) contributed to easing overall service price inflation in the services sector. Meanwhile, previously volatile categories like auto insurance (+0.1%) and airfares (+0.4%) have shown signs of stabilization.
Choi emphasized that while disinflation is gradual, the overall trend remains intact. Strong consumer demand, however, suggests that inflation will decline at a measured pace.
The outlook reflects fewer goods experiencing price declines. Durable goods prices have risen for three consecutive months, while non-durable goods and energy prices have reversed their earlier downward trends. The strengthening of food prices also indicates a diminishing deflationary impact on goods.
Choi highlighted the downward rigidity of service prices, citing slow declines in housing costs and persistent upward pressure on leisure service prices.
Looking ahead to next year, factors such as improving consumer sentiment, rising real wages and potential interest rate cuts could strengthen demand-side inflationary pressures. These conditions suggest that the decline in inflation rates is likely to remain gradual.
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