Report to Show Pace of U.S. Inflation in November

Core CPI, which excludes volatile energy and food prices, rose 6.3% in October from a year earlier, easing from September’s 6.6% increase, which was the biggest jump since August 1982.

The Fed has raised its benchmark interest rate this year at the fastest pace since the early 1980s to combat inflation. It is expected to announce on Wednesday a 0.5-percentage-point increase, bringing rates to a range between 4.25% and 4.5%, the highest level since December 2007. 

The CPI measures what consumers pay for goods and services. The Labor Department is scheduled to release its November report at 8:30 a.m. Eastern time on Tuesday.

Economists surveyed by The Wall Street Journal estimated that the CPI rose 7.3% in November from a year earlier and that core CPI rose 6.1%.

Inflation soared in 2021 as the economy recovered from the Covid-19 pandemic. Prices leapt as surging consumer demand—fueled by very low interest rates and government stimulus—collided with limited supply caused by pandemic-related disruptions. Russia’s invasion of Ukraine further inflamed inflation worldwide, pushing up prices for energy and other commodities. That culminated in June’s U.S. CPI reading, the highest since 1982.

Overall inflation has eased since the summer as supply bottlenecks have improved. Gasoline prices fell in November, with the national average price of regular unleaded gasoline at $3.26 a gallon on Monday, down by about 50 cents a gallon from a month earlier, according to OPIS, an energy-data and analytics provider. Prices peaked in mid-June at a record $5.02 a gallon. 

Inflation remains high, however, and has spread to more labor-intensive services as wages surged in a tight labor market where demand for workers exceeds the number of unemployed looking for jobs. Low unemployment and wage gains are helping fuel consumer spending, which has remained robust despite rapidly rising prices.

Fed Chair

Jerome Powell

in a recent speech said price trends for services, not including housing, reflect inflationary pressures in the broader economy and were important when gauging inflation’s future path.

“Because wages make up the largest cost in delivering these services, the labor market holds the key to understanding inflation in this category,” he said. 

“The labor market is sort of the last stand where strength there is leading to higher wage growth, and that could continue to pressure inflation,” said Michael Pond, head of global inflation-linked research at

Barclays

PLC.

Home sales have fallen as mortgage rates increased. An easing of housing costs and the slowing pace of price increases for goods could take some pressure off inflation, said

Paul Ashworth,

chief U.S. economist at Capital Economics. 

“For the next six to 12 months, even without moderation in wage growth, core inflation can come down quite considerably with just the disinflation we’re going to be getting from goods and shelter prices,” he said.

Mike Smith, owner of Griffith Bag Co., an agricultural-packaging company, said the supply challenges that had made his business difficult over the last two years are receding.

Deliveries of polypropylene bags from India, which his company supplies to the agricultural industry, have returned to normal, following delays of nearly six months in 2021.

“An order in July showed up in mid-September. It compressed so amazingly fast,” said Mr. Smith, whose business is in Harrisonburg, Va. Though prices for key commodities are still above prepandemic levels, they have started coming down steadily.

“Now we’re back to a mostly normal production cycle, and everything seems to be readily available,” he said.

High inflation has prompted consumers to adjust. Emma Chao, an art director in Brooklyn, N.Y., said she has scaled back on spending as prices surged for rent, health-insurance premiums, and veterinary care.

She has started buying clothes for her daughter at swaps instead of stores. She scrapped plans to buy a car and instead purchased an electric bike in a Black Friday sale. And she is planning to buy a smaller Christmas tree after a friend told her they were selling for more than $100 in Brooklyn. 

“I usually get a 5-foot tree, but this year we’ll just do a 3- or 4-foot tree,” said Ms. Chao, who is 37 years old. “Even then, I haven’t bought one yet because I’m dreading the price tag.”

Write to Gwynn Guilford at [email protected]

Core CPI, which excludes volatile energy and food prices, rose 6.3% in October from a year earlier, easing from September’s 6.6% increase, which was the biggest jump since August 1982.

The Fed has raised its benchmark interest rate this year at the fastest pace since the early 1980s to combat inflation. It is expected to announce on Wednesday a 0.5-percentage-point increase, bringing rates to a range between 4.25% and 4.5%, the highest level since December 2007. 

The CPI measures what consumers pay for goods and services. The Labor Department is scheduled to release its November report at 8:30 a.m. Eastern time on Tuesday.

Economists surveyed by The Wall Street Journal estimated that the CPI rose 7.3% in November from a year earlier and that core CPI rose 6.1%.

Inflation soared in 2021 as the economy recovered from the Covid-19 pandemic. Prices leapt as surging consumer demand—fueled by very low interest rates and government stimulus—collided with limited supply caused by pandemic-related disruptions. Russia’s invasion of Ukraine further inflamed inflation worldwide, pushing up prices for energy and other commodities. That culminated in June’s U.S. CPI reading, the highest since 1982.

Overall inflation has eased since the summer as supply bottlenecks have improved. Gasoline prices fell in November, with the national average price of regular unleaded gasoline at $3.26 a gallon on Monday, down by about 50 cents a gallon from a month earlier, according to OPIS, an energy-data and analytics provider. Prices peaked in mid-June at a record $5.02 a gallon. 

Inflation remains high, however, and has spread to more labor-intensive services as wages surged in a tight labor market where demand for workers exceeds the number of unemployed looking for jobs. Low unemployment and wage gains are helping fuel consumer spending, which has remained robust despite rapidly rising prices.

Fed Chair

Jerome Powell

in a recent speech said price trends for services, not including housing, reflect inflationary pressures in the broader economy and were important when gauging inflation’s future path.

“Because wages make up the largest cost in delivering these services, the labor market holds the key to understanding inflation in this category,” he said. 

“The labor market is sort of the last stand where strength there is leading to higher wage growth, and that could continue to pressure inflation,” said Michael Pond, head of global inflation-linked research at

Barclays

PLC.

Home sales have fallen as mortgage rates increased. An easing of housing costs and the slowing pace of price increases for goods could take some pressure off inflation, said

Paul Ashworth,

chief U.S. economist at Capital Economics. 

“For the next six to 12 months, even without moderation in wage growth, core inflation can come down quite considerably with just the disinflation we’re going to be getting from goods and shelter prices,” he said.

Mike Smith, owner of Griffith Bag Co., an agricultural-packaging company, said the supply challenges that had made his business difficult over the last two years are receding.

Deliveries of polypropylene bags from India, which his company supplies to the agricultural industry, have returned to normal, following delays of nearly six months in 2021.

“An order in July showed up in mid-September. It compressed so amazingly fast,” said Mr. Smith, whose business is in Harrisonburg, Va. Though prices for key commodities are still above prepandemic levels, they have started coming down steadily.

“Now we’re back to a mostly normal production cycle, and everything seems to be readily available,” he said.

High inflation has prompted consumers to adjust. Emma Chao, an art director in Brooklyn, N.Y., said she has scaled back on spending as prices surged for rent, health-insurance premiums, and veterinary care.

She has started buying clothes for her daughter at swaps instead of stores. She scrapped plans to buy a car and instead purchased an electric bike in a Black Friday sale. And she is planning to buy a smaller Christmas tree after a friend told her they were selling for more than $100 in Brooklyn. 

“I usually get a 5-foot tree, but this year we’ll just do a 3- or 4-foot tree,” said Ms. Chao, who is 37 years old. “Even then, I haven’t bought one yet because I’m dreading the price tag.”

Write to Gwynn Guilford at [email protected]