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Inflation Eases

The Consumer Price index rose 7.1% in November compared with a year ago, lower than October’s 7.7% pace and sharply down from June’s 9.1% peak. It’s the slowest year-over-year increase in 12 months and is a sign that the Fed’s interest rate hikes are dampening once-rampant inflation. While the rate of price increases has slowed, inflation does remain historically high by its own standards, and it could be manifesting itself in the tight labor market where wages are staying elevated.

Titan’s Takeaway

Yesterday’s CPI print comes on the doorstep of the FOMC meeting today and could set the stage for the Fed to slow the pace of its rate hikes to 50 basis points into next year. The softening inflation print gives the Fed some space to relax its stance, but we are likely still not out of the woods, with “shelter cost” constituting a substantial portion of the price increases.