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U.S. Inflation Rises, But Falling Gas Prices Bring Holiday Relief
The U.S. consumer price index (CPI) jumped 0.3% in November, the largest gain since April after increasing by 0.2% for four straight months. Most of the increase in inflation came from higher food prices as well as more expensive motel and hotel rooms.
Meanwhile, rents defied their recent trend after increasing at the slowest pace since July 2021. Food prices increased 0.4% in November, up from 0.2% in October while grocery store food prices surged 0.5%, with the cost of eggs soaring 8.2% amid an avian flu outbreak. However, prices of cereals and bakery products fell 1.1%, the biggest fall since 1989.
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However, many analysts do not expect the surge in inflation to discourage the Federal Reserve from delivering a third consecutive interest rate cut next week thanks to a cooling labor market and rental costs.
“The data have given the Fed the ‘all clear’ for next week, and today’s inflation data keep a January cut in active discussion,” Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, told Reuters.
Overall inflation has slowed considerably after peaking at 9.1% in June 2022, with falling oil and fuel prices also helping cool inflation.
The U.S. national average price of gasoline has fallen below $3 per gallon for the first time in more than three and a half years. According to GasBuddy data compiled from more than 12 million individual price reports covering over 150,000 gas stations across the country, the average national gasoline price was $2.97 per gallon on Monday, a level they last touched in 2021.
De Haan has noted that some 35 U.S. states now enjoy average gas prices below $3 per gallon, an increase of seven states from a month ago.
“The national average has finally fallen below $3 per gallon, and it couldn’t come at a better time for motorists with the holidays upon us. One would need to count over 1,300 days since we’ve seen the national average this low, with the affordability of gasoline at its lowest non-COVID level since 2015,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
By Alex Kimani for Oilprice.com
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Alex Kimani
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
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