The American Institute for Economic Research’s Everyday Price Index (EPI) fell 0.36 percent to 287.95 in November 2024. This decline marks the fourth monthly decline in a row, the longest string of declines since the inflationary updraft began in late 2020.
AIER Everyday Price Index vs. US Consumer Price Index
(NSA, 1987 = 100)
(Source: Bloomberg Finance, LP)
Among the twenty-four EPI constituents, 10 rose in price, one was unchanged, and thirteen fell. The drop in EPI was once again fueled primarily by falling motor oil prices, followed by declines in internet service and housing fuels and utilities prices. The categories with the largest increases were food away from home, tobacco and smoking products, and personal care services.
On December 11 2024, the US Bureau of Labor Statistics (BLS) released its November 2024 Consumer Price Index (CPI) data. Both the month-to-month headline and core CPI readings rose by 0.3 percent, meeting surveyed expectations for both.
In November 2024 the shelter index advanced by 0.3 percent, accounting for nearly 40 percent of the monthly all-items increase. The food index climbed 0.4 percent, with the food at home index rising 0.5 percent and food away from home advancing 0.3 percent. Among grocery categories, the index for meats, poultry, fish, and eggs rose 1.7 percent, including an 8.2 percent surge in egg prices. Of particular note the cereals and bakery products index dropped 1.1 percent, the largest one-month decline since the index began in 1989. The energy index edged up 0.2 percent, with gasoline increasing 0.6 percent, natural gas rising 1.0 percent, and electricity declining by 0.4 percent.
Core inflation, excluding food and energy, rose by 0.3 percent, consistent with the pace of the past three months. Notable contributors included a 2.0 percent rise in used cars and trucks, an 0.6 percent increase in household furnishings and operations, and an 0.6 percent gain in new vehicles. Prices of lodging away from home surged 3.2 percent, reflecting heightened travel-related costs. Medical care rose 0.3 percent, with physicians’ services increasing while prescription drug prices fell 0.4 percent. The communication index declined 1.0 percent, extending its recent downward trend.
November 2024 US CPI headline and core month-over-month (2014 – present)
(Source: Bloomberg Finance, LP)
On a year-over-year basis, headline CPI rose 2.7 percent, meeting forecasts. Core CPI rose 3.3 percent from November 2023 to November 2024, also as expected.
November 2024 US CPI headline and core year-over-year (2014 – present)
(Source: Bloomberg Finance, LP)
The energy index decreased 3.2 percent during the last 12 months ending in November, with gasoline prices falling 8.1 percent and fuel oil plunging 19.5 percent. Electricity prices climbed 3.1 percent, and natural gas edged up 1.8 percent. Meanwhile, the food index increased 2.4 percent over the year, with food at home rising 1.6 percent and food away from home up 3.6 percent.
Within the food at home category, the index for meats, poultry, fish, and eggs rose 3.8 percent, and nonalcoholic beverages increased 2.8 percent. Smaller gains were seen in dairy products, which rose 1.2 percent, and fruits and vegetables, which increased 1.1 percent. In contrast, the cereals and bakery products index declined 0.5 percent, marking its largest annual drop since December 2017. Among other categories, shelter prices rose 4.7 percent, the slowest annual increase since February 2022, while motor vehicle insurance surged 12.7 percent. Medical care, education, and recreation also recorded increases of 3.1 percent, 4.2 percent, and 1.5 percent, respectively from November 2023 to November 2024.
November’s CPI report reveals stubbornly elevated inflation. The monthly core CPI increase was driven by a combination of higher auto prices and persistent, while moderating, shelter costs. Used car prices increased by nearly 2.0 percent with new vehicle prices rising 0.6 percent – the latter marking the category’s fastest growth since October 2022. Shelter inflation is showing signs of easing, with rents and owners’ equivalent rent (OER) both advancing just over 0.2 percent, down from last month’s higher rates.
The last mile of disinflation shows unevenly distributed pressures. Shelter disinflation is progressing, although unevenly, as the Bureau of Labor Statistics’ methods lag real-time market trends. The diffusion of core inflation also remained largely unchanged since last month with 45 percent of spending categories experiencing deflation and another 9 percent showing inflation between 0 and 2 percent.
Financial markets responded positively to the November CPI report, with Treasury yields falling and equities rallying modestly in a reflection of optimism regarding rate cuts at the Federal Open Market Committee’s December 17th – 18 meeting. However, uncertainties remain, and the likelihood of a rate cut, though favored, is far from guaranteed.
Inflation headwinds are likely to persist in December with seasonal pressures in auto prices and rising energy costs possibly pushing headline CPI to 2.9 percent year-over-year. Shelter disinflation is projected to continue into 2025 but continuing at a slow pace, as restrictive monetary policy gradually acts upon housing costs. While monetary policy effects on inflation have appeared somewhat muted over the last 8 to 12 months, the stated emphasis on remaining data-focused suggests that the Federal Reserve may interpret recent data as a temporary hurdle rather than a derailment of its path toward achieving the 2-percent inflation target. The path of various measures of US labor market trends, many recently buoyed by optimism regarding the incoming administration’s anticipated pro-business policies, will be another key factor in policy formation.
