The consumer price index, the top measure for inflation in the U.S., continued to fall in November as inflation dropped to 3.1% in the 12-month period ending in November, which is down from 3.2% in October and 3.7% in September. The Bureau of Labor Statistics released the updated consumer price index on Tuesday.
The main reason inflation dropped significantly was the cost of energy has declined 5.4% in the last year. Consumers spent an average of 8.9% less on gas in November 2023 than in November 2022.
The once sky-high inflation on food at the grocery store has cooled to near-normal levels. Food meant to be consumed at home has gone up 1.7% in the last year, the Bureau of Labor Statistics said.
Some common grocery staples, such as milk, fresh fruits and vegetables, coffee, and butter were cheaper this November compared to last November.
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The biggest driver keeping inflation elevated is shelter, which was up 6.5% last month compared to November 2022.
The updated inflation numbers come just one day before the Federal Reserve could announce a change to interest rates. Federal Reserve Chair Jerome Powell has made it the Fed's goal to get inflation to an annualized rate of 2%.
The consumer price index has fluctuated in the 3%-4% range for much of 2023 after topping 9% in 2022. Powell concedes the inflation rate still needs to come down.
"Wage growth remains high but has been gradually moving toward levels that would be more consistent with 2% price inflation over time, and real wages are growing again as inflation declines," Powell said earlier this month. "Over the six months ending in October, core inflation ran at an annual rate of 2.5%, and while the lower inflation readings of the past few months are welcome, that progress must continue if we are to reach our 2% objective. High inflation initially emerged from a collision between very strong demand and pandemic-constrained supply. The normalization of supply and demand conditions has played a critical role in the disinflation so far, as has the substantial tightening of monetary policy and overall financial conditions over the past two years."
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.
For working Americans, federal data shows average wages have slightly outpaced inflation in the 12-month period ending in November. Data shows that Americans' buying power increased 1% in the year ending last month. From November 2021 through November 2022, U.S. workers lost about 2.2% of their buying power.
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