Inflation is being a bit of a humbug, refusing to let us all enjoy a little relief from higher prices this holiday season.
At least, that seems to be the case, given the latest Consumer Price Index report, released Wednesday by the Bureau of Labor Statistics. The report showed that prices rose by 2.7% annually in November. The rise aligned with most experts' expectations, but it marked the second month in a row of inflation reheating.
Housing retained its title as the biggest contributor to rising prices, with the shelter index up by 0.3% month over month. Housing accounted for nearly 40% of the monthly increase, according to the BLS report.
This comes after last week's BLS jobs report, which showed strong job growth, with 227,000 positions added in November. Although unemployment inched up to 4.2%, the data aligned with expectations and is still considered low.
But rising inflation and a strong job market doesn't bode well for potential interest rate cuts. The Federal Reserve began raising interest rates in 2022 to curb soaring inflation. A combination of cooling inflation numbers and rising unemployment prompted the central bank to cut the federal funds rates twice this fall.
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With inflation coming in as expected, the markets are still in favor of a 0.25% rate cut at next week's Fed meeting. However, it's possible the Fed could decide to hold rates steady, what with inflation inching up and the job market remaining strong.
"I think the Fed is still going to cut by a quarter point at this month's meeting," economist Robert Fry said in an email. "But progress towards the Fed's 2% inflation target has stalled, and the Fed is likely to pause after this month's cut."
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Interest rates can affect many aspects of your financial life, including how much you pay to borrow money and how much you earn when saving. If the Fed does cut interest rates next week, now might be a good time to lock in a higher interest rate on your savings with one of the top certificates of deposit.
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