Inflation Rises Closer to 3% on Consecutive Months of Gains – Technologist

Just when it appeared the Federal Reserve tamped down runaway inflation, the rate crept in the wrong direction.

November inflation came in at 2.7% today, 0.1% higher than October and 0.3% higher than September. All eyes will be on the December number to see if we creep even closer to 3%.

The Fed’s long-term stated goal is to maintain inflation at a level of 2.0% year-over-year. Inflation and interest rates affect everything from grocery bills to mortgage rates.

Inflation reached a 40-year high of 9.1% in June 2022. A series of aggressive interest rate hikes by the Federal Reserve helped slice that figure down to 2.4% in September.

The Fed made a half-point cut to interest rates in September and another quarter-point cut in November. The Consumer Price Index (CPI), the United States government’s trusted measure of inflation, rose from 2.4% to 2.7% during that time. (Core inflation, which excludes the volatile food and energy sectors, rose 3.3% year-over-year in November.)

The market widely expects another quarter-point interest rate cut this week. But the Fed’s dual mandate includes protecting the job market and moderating prices. As long as inflation proves stubborn, optimistic predictions about interest rates improving on credit card debt, mortgages and auto loans look less likely.

The Fed has taken a more cautious, wait-and-see tone in its recent public comments. Economic and policy uncertainty lingers with a presidential change in January. Some economists have predicted that potential tariffs could exacerbate the stubborn inflation problem.

Inflation will be a key issue in the first half of 2025 with the presidential transition opening the door for changing policies. That creates some uncertainty with the CPI number proving stubborn.

If you’re watching interest rates closely due to a potential home or auto purchase, or any other type of loan, it’s important to avoid projections that may be overly optimistic. The rates may not decline as far as some anticipated in the intermediate-term future.

Also, it’s always critical to pay off high-interest credit card debt. But the potential for higher rates for longer could exacerbate an already-growing problem in America.

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