Inflation Cools To 7.1% In November: BLS

WASHINGTON — Inflation slowed again in November, with the prices up 7.1 percent compared to a year ago — down from 7.7 percent in October and from the recent peak of 9.1 percent in June, the government said in a report Tuesday.

Driving the trend was less expensive gasoline — the average price for a gallon of regular gasoline in Washington on Tuesday was $4.09, compared to $4.80 at this time last month — and cheaper electricity and used cars.

The pain of inflation varies by region.

Across the West, inflation fell another 0.4 percent in November, staying in line with the national average of 7.1 percent, according to the new Bureau of Labor Statistics report. The most recent available data for the Seattle region is from October, which showed consumer prices still up nearly 9 percent from the year before. Those numbers will be updated in January.

Despite the progress, high prices continue to take a bite out of Washingtonians’ budgets, and economists warn inflation isn’t expected to return to levels they were accustomed to anytime soon.

Prices for food and shelter continued to increase, the government said. Rising housing costs more than offset the 1.6 percent month-over-month decreases in energy costs, and the cost of food increased 0.5 percent from October to November, according to the report.

The cost of meat and eggs fell 0.2 percent over the month after increasing 0.6 percent in October. Beef prices fell 0.8 percent over the month, and pork prices 0.3 percent.

But the costs of fruits and vegetables increased 1.4 percent in November, after falling 0.9 percent in October. The costs of cereal and bakery products increased 1.1 percent, and dairy and related products increased 1.0 percent. Non-alcoholic beverages also cost more, rising 0.7 percent in November after a 0.5 percent rise in October.

November was the fifth straight month the consumer price index has decreased, and it’s at its lowest level since December 2021. The 7.1 percent CPI is down from 7.7 percent in October. On a month-to-month basis, the CPI rose just 0.1 percent in November, a decrease from 0.4 percent in October.

The Federal Reserve is still expected to raise its benchmark interest rate for a seventh time this year when it meets on Wednesday, a move that will further increase borrowing costs for consumers and businesses. Economists warn that by continuing to tighten credit to fight inflation, the Fed is likely to cause a recession next year.

Fed Chair Jerome Powell has said he is tracking price trends in three different categories to best understand the likely path of inflation: Goods, excluding volatile food and energy costs; housing, which includes rents and the cost of homeownership; and services excluding housing, such as auto insurance, pet services and education.

In a speech two weeks ago in Washington, D.C., Powell said there had been some progress in easing inflation in goods and housing, but not so in most services. Physical goods like used cars, furniture, clothing and appliances have become steadily less expensive since the summer.

Used car prices, which had skyrocketed 45 percent in June 2021 compared with a year earlier, have fallen for most of this year.

Housing costs, which make up nearly a third of the consumer price index, are still rising. But real-time measures of apartment rents and home prices are starting to drop after having posted sizzling price acceleration at the height of the pandemic. Powell said those declines will likely emerge in government data next year and should help reduce overall inflation.

Still, services costs are likely to stay persistently high, Powell suggested. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at a brisk 5 percent to 6 percent a year, price pressures keep building in that sector of the economy.

Services businesses tend to pass on some of their higher labor costs to their customers by charging more, thereby perpetuating inflation. Higher pay also fuels more consumer spending, which allows companies to raise prices.

“We want wages to go up strongly,” Powell said, “but they’ve got to go up at a level that is consistent with 2 percent inflation over time.”

The Associated Press contributed reporting.