There’s much speculation about when or if the Federal Reserve will start cutting interest rates, with many analysts suggesting May 2024 as a potential target timeframe. The key determining factor is whether inflation can come under control before we get there.
Markets reacted positively to today’s inflation news, which suggests that rate cuts may be coming sooner than we think.
Both the NASDAQ 100 Futures and Dow Jones Futures indices were in the green (+0.07%) upon the release of soft inflation data for November. While inflation rates rose slightly month-over-month, this was generally expected among most market watchers.
The November 2023 report of the Consumer Price Index of All Urban Consumers (CPI-U) indicates that inflation rose by 0.1%, following an unchanged month in October and a 0.4% increase in September. These data were released at 8:30 am EST on Tuesday, December 12, 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 3.1%, marking a slight deceleration from October 2023’s CPI report.
According to a CNBC report, prices edged higher across the board in November, although within the expected range (3.0-3.2%) that most analysts forecasted. Now, all eyes are pointed at Chairman Powell’s Federal Open Market Committee (FOMC) meeting later this week, where he could divulge more information about Americans might see some interest rate relief.
Keeping inflation in check were energy prices, which fell by 2.3 percent in November with gasoline dipping by 6 percent. At the same time, shelter prices were the main drivers of inflation, up 6.5 percent on a 12-month basis. Core CPI also increased by 0.3 percent, an increase from 0.0 during the month prior. On the whole, the November 2023 CPI report was warmly received by most investors and market watchers, as it may be a sign of dovish interest rate policies to come from the Fed.
Source: Bureau of Labor Statistics
November’s monthly CPI figure marks an acceleration from October’s (0.0%) month-over-month figure, yet a sharp deceleration from September’s (0.4%).
Food Prices
The food index rose by 0.2 percent in November, a decrease from 0.3 percent during the previous month. Four of the six principal categories in the grocery store food group index rose in price in November, including strong 0.5 percent rises in the nonalcoholic beverages and cereals and bakery items indices. On the other hand, meats, poultry, eggs, and fish decreased in price by 0.2 percent. Across the board, the food at home index increased by 1.7 percent on a 12-month basis.
Energy Prices
Thanks to gasoline prices at an 11-month low, the energy index fared well in November 2023. The index dropped by 2.3 percent following an even larger 2.5 percent decrease in October. As stated, gas prices led the charge with an excellent 6.0 percent price decline (a decline of 7.3 percent before seasonal adjustments). On an annual basis, the energy index fell by 5.4 percent with mixed components, with the electricity index rising by 3.4 percent while the fuel oil index dropped by 24.8 percent.
Core November 2023 CPI
Regarding the core CPI data for November 2023 (i.e., inflation less food and energy), the index rose 0.3 percent month-over-month and 4.0 percent year-over-year, after rising by a narrow margin (0.2%) in October. Below is an itemized breakdown of the main price fluctuations seen in November’s core CPI reading:
- Shelter index: +6.5%
- Rent index: +0.5%
- Personal care items: +5.2%
- Lodging away from home: (-0.9%) (October: [-2.5%])
- Motor vehicle insurance: +1.0% (October: +1.9%)
- Medical care index: +0.6% (October: +0.3%)
- Used cars and trucks: +1.6% (October: [-0.8%])
- Index for apparel: (-1.3%) (October: +0.1%)
Source: Bureau of Labor Statistics
Seasonally Unadjusted CPI Data for November 2023
Before seasonal adjustments, the CPI-U for November 2023 increased (+3.1%) year-over-year, rising to an index level of 307.051. Since these figures are unadjusted, they include regular seasonal price fluctuations that generally occur by the same margins every year.
Source: Bureau of Labor Statistics
Don’t Get Gaslit This Holiday Season
For some strange reason, the economic powers-that-be are intent on letting you know that the economy is in great shape.
Just last month, a Wall Street Journal headline read: “The Economy is Great – Why Are Americans in Such a Rotten Mood?” While it’s true that high consumer spending has kept America can sliding into a recession, this only tells a small part of the story. Behind the cheery backdrop of high spending and GDP growth is a grimmer reality: Americans have record levels of debt, increasingly unaffordable housing, sky-high borrowing costs, stagnant wages, and rising unemployment rates.
Don’t let the financial media fool you into believing that we’re on solid ground. The reality, unfortunately, is that America’s economic foundations could hardly be shakier.
Economic fundamentals don’t bode well for everyday Americans who, now more than ever, are struggling to make ends meet. The good news, however, is that you have the power to counteract the negative effects of inflation and other bearish macroeconomic indicators. Consider consulting with a financial expert about diversifying your investment portfolio with alternative assets such as gold and silver.
Investing in gold and silver can serve as a protective measure for your savings against the devaluation of the U.S. dollar, allowing you to preserve your wealth during times of inflation.
The historical events of 2008 and 2020 have demonstrated that assets such as gold and silver tend to outperform traditional securities when the financial markets are turbulent. For many investors, gold acts as a reliable hedge against inflation, offering a stable store of value when conventional investments face challenges.
If you’re considering diversifying your portfolio with gold or silver, you can take the first step by opening an account with one of the top-rated gold IRA service providers. In the meantime, you can use our complimentary CPI inflation calculator tool to monitor how inflation is affecting your household during the upcoming holiday season and beyond.
Liam Hunt, M.A., is a writer specializing in finance and international affairs. His articles have appeared in the Toronto Star, Ottawa Citizen, and Vancouver Sun, and his expert commentary has been featured in Forbes, Bloomerg, Barron's, and the New York Post.
