For the second straight month, consumer prices rose more than expected.
The headline CPI rose 0.3% MoM in November, ahead of the 0.2% gain consensus expected. The MoM core print is 0.23%, in line.
YoY, the headline gauge rose 2.1%, more than the expected 2% bump, while core was steady at 2.3%.
“Increases in the shelter and energy indexes were major factors in the seasonally adjusted monthly increase of the all items index”, the BLS said. Medical care, recreation, and food also contributed.
Although the headline print is hotter than anticipated, it’s hard to imagine this affecting the Fed’s decision calculus going forward. As such, it’s unlikely to move market pricing.
Today’s data comes on the heels of Friday’s benign average hourly earnings numbers, which were reasonably subdued, despite the blockbuster jobs report.
Jerome Powell has made it abundantly clear that it would take a serious acceleration in inflation to force the Fed to consider rate hikes anytime soon. He was explicit about that during the October press conference, and he’ll probably reiterate it on Wednesday, if pressed.
If anything, the fact that core CPI rose just 0.2% for a second consecutive month will likely bolster the FOMC’s confidence that the US is nowhere near some kind of tipping point beyond which prices might abruptly surge, catching policymakers behind the curve.
Besides, core PCE is still soft and has stubbornly refused to rise sustainably above the Fed’s 2% target.