The November 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.3% for the month, outperforming October’s 0.2% rise. These data were released at 8:30 am EST on Wednesday, December 11, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.7%, a rise from the 2.6% witnessed in October.
Although the CPI data exceeds the FOMC’s 2% target, the results aligned with economists’ estimates. The table below is courtesy of Investing.com. The left column represents November’s figures, while the right column represents forecasters’ expectations. As you can see, most metrics (marked in black) matched consensus predictions.
FOMC Chairman Jerome Powell should welcome the news, as the data supports the committee’s current trajectory. With economic data holding up and inflation behaving, Powell said on Nov. 14, “The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
As a result, while the FOMC is widely expected to cut interest rates by 25 basis points at next week’s meeting, Powell may maintain a gradual approach to monetary easing.
Used cars and trucks were the primary outlier this month, with the segment rising by 2% MoM in November. And outside of utilities (up by 1% MoM), no other metric increased by more than 0.6% MoM. Core inflation (which excludes the impacts of food and energy), rose by 0.3% in November, matching August, September, and October’s prints. However, shelter slowed to 0.3% MoM, down from 0.4% MoM in October.
Food Prices
The food index continued its upward trend, rising by 0.4% in November and doubling October’s 0.2% print. Four of the six major grocery store food indexes increased:
- Cereals and bakery products (-1.1%)
- Meats, poultry, fish, and eggs (+1.7%)
- Dairy and related products (-0.1%)
- Fruits and vegetables (+0.2%)
- Nonalcoholic beverages (+1.5%)
- Other food at home (+0.1%)
In addition, the food away from home index rose by 0.3%, a slight uptick from October’s 0.2% result.
Energy Prices
The energy index rose by 0.2% in November after recording a flat performance in October. Gasoline and natural gas prices rose by 0.6% and 1.0%, respectively, while electricity slumped by 0.4%.
Core CPI November 2024
The November core CPI rose by 0.3% month-over-month and 3.3% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.3%) [October: +0.4%]
- Rent index: (+0.2%) [October: +0.3%]
- Owners’ equivalent rent: (+0.2%) [October: +0.4%]
- Motor vehicle insurance: (+0.1%) [October: -0.1%]
- Medical care services: (+0.4%) [October: +0.4%]
- Physician services: (+0.3%) [October: +0.5%]
- Hospital services: (+0.0%) [October: +0.5%]
- Airline fares: (+0.4%) [October: +3.2%]
Seasonally Unadjusted CPI Data for November 2024
Before seasonal adjustments, the CPI-U for November 2024 increased by 2.7% Y-o-Y to an index level of 315.493. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
No Rush to Cut?
With resilient economic data allowing Powell to take a patient approach to rate cuts, little occurred to disrupt his thesis this week.
For example, The Conference Board released its Employment Trends Index (ETI) on Dec. 9. Economist Mitchell Barnes noted, “The ETI rose again in November, marking consecutive monthly gains for the first time in 2024. The increases in October and November add up to the largest two-month increase in the ETI since the torrid period of job gains in 2022 coming out of the pandemic.”
Similarly, the NFIB released its Small Business Optimism Index on Dec. 10. The report stated: “The NFIB Small Business Optimism Index rose by eight points in November to 101.7, after 34 months of remaining below the 50-year average of 98. This is the highest reading since June 2021. Of the 10 Optimism Index components, nine increased, none decreased, and one was unchanged.”
Add it all up, and there aren’t many catalysts to entice the FOMC to accelerate rate cuts. Consequently, interest rates should remain high until the U.S. economy showcases further weakness.
In the meantime, risk assets remain elevated, and gold continues to perform well despite a stronger U.S. dollar and elevated interest rates. On Dec. 2, Goldman Sachs reiterated its year-end 2025 price target of $3,000, with Commodities Strategist Lina Thomas writing, “Since 2022, gold prices have surged 40% even as US interest rates were climbing. That is very strange. Typically, higher interest rates make gold less attractive – because gold doesn’t pay any interest, unlike bonds.”
“That was a wake-up call for central banks worldwide. They began to diversify their reserves away from the dollar and into an asset no one can freeze – and that is gold. We don’t see central bank demand slowing down. And with the Fed cutting rates, investors are jumping back in, too.”
Thus, with the investment bank predicting a more bullish outcome than the futures market (the dotted red line below measures Goldman Sachs’ forecasted price), gold could have plenty of room to run.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
