The Headline inflation for the 12 months ended Nov’24 was at 2.70% y-o-y higher than previous months numbers of 2.60% y-o-y. On month-on-month basis the headline inflation has witnessed the highest increase of 0.30% in past 6 months on analyzing data since May’24.
In the month of Nov’24 on an annual basis, Energy prices reduced by -3.20%, where the Energy Commodity reduced by -8.50%, mainly affected by a major drop in Fuel oil which was at -19.5% , whereas, the Gasoline (all types) reduced by -8.10%. Energy Services increased by 2.80% where Electricity and Utility (piped) gas services increased by 3.10% and 1.80% respectively.
The index for Food increased by 2.40% y-o-y in Nov’24, highest in past 9 months whereas the monthly increase in Food index is of 0.40%. Annually, Food at Home increased by 1.60% and Food Away from Home increased by 3.60% in Nov’24.
Core Inflation
The Core Inflation (excluding Food and Energy) is at 3.30% for the 12 months ended Nov’24, remains unchanged for past 3 months now (Sep’24 to Nov’24). The Core inflation has witnessed a big correction and has become half of its Sep’22 peak of 6.60%, which was the highest in past 18.5 years (Data analysed from July’2004).
In Nov’24 the index for Commodities less food and energy commodities witnessed a miniscule reduction of
-0.60% y-o-y where the Apparel, Medical care Commodities, New vehicles and Used cars and trucks are at 1.10%, 0.40%, -0.70% and -3.40% respectively. The Services less energy services stood at 4.60%, lowest in past 32 months, where Transportation services, Shelter and Medical care services are at 7.10%, 4.70% and 3.70% respectively.
Outlook
The US CPI Nov’24 data witnessed a slight uptick in Headline inflation which was at 2.70% y-o-y from its previous months data of 2.60% y-o-y. Though there is a slight increase in the headline inflation on monthly basis, which cautions the Fed, the inflationary scenario still remains in line with Fed’s long-term target of +/-2%. The unemployment rate in Nov’24 continued to rise to 4.20% y-o-y and the Unemployed people reached at 7.10 million. These numbers are higher when compared to a year earlier, where unemployment rate was at 3.70% and unemployed people were at 6.30 million.
Given the fact that the core inflation has been stable at 3.30% since last three months, and the uptick in headline inflation quite marginal at best, and the need to support economic growth is felt, the probability of further rate cuts from the Fed is high. Popular surveys put the probability of a rate cut in the upcoming Fed meet as close to 98.60%.
