November consumer price inflation numbers show bigger-than-expected drop in inflation. This positive trend provides a ray of sunshine – real relief — as inflation continues to be a significant cause for concern. This new national report came close to being a victim of the US government shutdown. As expected, it indicated that the CPI rate fell to 3% in September, surprising many forecasters who were looking for a higher number. As a result of October’s government shutdown, release of the CPI report was delayed. It also hampered our ability to collect key data.
In the past few months, costs have dropped as much for accommodations, dairy and some apparel as they have increased. This trend points to lowering consumer price pressure trends, providing at least some relief as the busiest holiday shopping season gets underway. Cooling inflation signs come right as the public’s irritation with years of continuously inflating prices reaches its summit. This worsening crisis places even greater pressure on US President Donald Trump to follow through on his recent rhetoric about providing economic relief.
Art Hogan, chief market strategist at B. Riley Wealth, underscored the report’s significance. He argued that it was a good thing, as it highlighted all the early discounts retailers were offering in November to prepare for the very active shopping season.
“All told this is a positive report, that comes with an asterisk,” – Art Hogan, chief market strategist at B. Riley Wealth.
Hogan pointed out that future CPI reports will almost surely correct any statistical miscalculations identified in the existing data. That’s a good sign, because it means that upcoming reports could provide a better indication of sustained inflation trends.
The latest CPI numbers will certainly be on the Fed’s mind as they decide how to raise interest rates, or not. Today’s CPI report is a good deal lower than consensus expectations. This has led to talk that the central bank would push back even harder by aggressively easing monetary policy for further economic stimulus.
Moving forward, these recent developments are sure to command analysts’ and policymakers’ attention for the ramifications they may hold. The CPI is a key barometer for inflation throughout the US economy. Its former volatility had a profound impact on sustainable consumer choices and the direction of federal economic policy.