2023.12.2214:05:00UTC+00U.S. Consumer Price Growth Slows More Than Expected In November

A highly anticipated report released by the Commerce Department on Friday showed consumer price growth in the U.S. slowed by more than expected in the month of November.

The report said the annual rate of consumer price growth decelerated to 2.6 percent in November from a downwardly revised 2.9 percent in October.

Economists had expected the pace of price growth to slow to 2.8 percent from the 3.0 percent originally reported for the previous month.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also slowed to 3.2 percent in November from a downwardly revised 3.4 percent in October.

Economists had expected core consumer price growth to decelerate to 3.3 percent from the 3.5 percent originally reported for the previous month.

On a monthly basis, consumer prices edged down by 0.1 percent in November after coming in unchanged in October, while core consumer prices inched up by 0.1 percent for the second straight month.

"We entered 2023 worried about inflation and how many more times the Fed was going to raise rates, but we are ending 2023 surprised at how low inflation has come down - especially as unemployment has remained so low - and are wondering how many times the Fed will cut," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. "We think the 6 rate cuts that the market has priced in for next year is too high, given the current state of the economy, with GDP growth at high levels and the unemployment rate at very low levels," he added. "However, if inflation rapidly goes back to target then it's possible that both the stock market and the Fed Funds market are correct."

The readings on inflation, which are said to be preferred by the Federal Reserve, were include in the Commerce Department's report on personal income and spending.

The Commerce Department said personal income climbed by 0.4 percent in November after rising by an upwardly revised 0.3 percent in October. The increase matched economist estimates.

Disposable personal income, or personal income less personal current taxes, also advanced by 0.4 percent in November following a 0.3 percent increase in October.

Meanwhile, personal spending rose by 0.2 percent in November after inching up by a downwardly revised 0.1 percent in October.

Economists had expected personal spending to climb by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Excluding price changes, personal spending increased by 0.3 percent in November after edging up by 0.1 percent in October.

With income increasing by more than spending, personal saving as a percentage of disposable personal income inched up to 4.1 percent in November from 4.0 percent in October.