The just-released CPI for November has ignited a firestorm of discussion among economists and UI analysts. It answers fewer questions about inflation dynamics than it raises. The rippling inflation consumer report, published Friday, December 12, reported that consumer prices exploded by 2.7% over the past 12 months ending in November. This was a significant success, but it was still well below the expected 3.0%. The new core index, which excludes prices for the volatile food and energy sector, went up a comparatively modest 2.6% over the same period. This growth was below the anticipated 2.9%.
The data for November suggests a slower trajectory for core prices, which increased at an average monthly pace of just 0.25% throughout 2023. Over the last two months, core prices increased by an anemic 0.16%. That comes out to an average hike of just over 0.08% per month. That would be a major reversal in the pace of price increase, prompting plenty to speculate about its meaning for inflation going forward.
Experts had predicted that the November CPI report would clear up any confusion and shed obfuscation over price trends. Instead, it has further complicated today’s already tumultuous economic landscape. The subsequent absence of revisions in CPI data only adds to the analysis’s unintended complexities, and some stakeholders are left grasping at straws to spin the results positively. If you talk to lots of folks on the street, they’ll tell you that today’s reading is really overstating the inflation slowdown. This indicates that the reality may be more nuanced than would initially appear.
Comparative normalcy led some analysts to predict an upward rebound in prices. That might occur when the December CPI report comes out on January 13. Consumers are optimistic as they see the pace of inflation starting to cool. The volatility we’ve experienced in recent months could still derail the data for a month or two more.
Then came the November report, which sent mixed signals. This has led to even more bewildering questions about the actual state of price growth in our economy. Though there are good signals pointing to a cool inflation climate, our underlying data indicates a lot of noise and volatility, as well as uncertainty. So what gives with the core index Performance here warrants serious and ongoing examination as this index continues to perform well below the bar.