November CPI Forecasts Show Stalled Progress on Inflation

Forecasts for the November Consumer Price Index report find that inflation remained relatively steady last month. Price pressures have eased dramatically since peaking in the summer of 2022, but progress is slowing significantly as the inflation rate approaches the Federal Reserve’s target.

Overall, economists expect that consumer prices rose 0.2% on a monthly basis in November, according to FactSet’s consensus estimates. That would mean the annual inflation rate rose slightly to 2.7% from 2.6% in October. Economists expect the core measure of inflation (which excludes volatile food and energy prices) rose 0.28% in November, which would keep the annual rate steady at 3.3%.

“We actually haven’t seen a tremendous amount of change in the data over the last month,” says Josh Hirt, senior US economist at Vanguard. He adds that the overall inflation rate remains rangebound at 2.5%-3.0%. He thinks some of this slowdown in progress can be explained by base effects—weaker data a year ago makes today’s look stronger in comparison—while it’s partly attributable to persistent inflationary pressures in sectors like services and housing. Hirt expects 0.25% growth in the core CPI for November, slightly below the consensus estimate.

The Fed targets inflation that averages 2% over the long run as measured by the Personal Consumption Expenditures Index. Much of the source data is the same across the PCE and CPI indexes, but the components are weighted differently.

October CPI Report Highlights

• CPI report release date and time: Wednesday, Dec. 11, at 8:30 a.m. EST
• The CPI is forecast to rise 0.2% in November after rising the same amount in October.
• Core CPI is forecast to rise 0.28% in November after rising the same amount in October.
• The CPI year over year is forecast to rise 2.7% in November after rising 2.6% in September.
• Core CPI year over year is forecast to rise 3.3% in November after rising the same amount in October.

Overall, analysts at Goldman Sachs expect that price increases across the used car, airfares, apparel, and car insurance categories put upward pressure on inflation in November. Food and energy prices also rose, they said. Their forecast is for 0.28% core CPI growth, in line with the consensus.

Hirt expects the sticky shelter prices that have been a major driver of inflation over the past year and a half to persist: “We don’t really see any material softening of that until we get into next year.” He expects the consistent deflation in the goods category to slow in the coming months. He says he is paying extra attention to services inflation, which could remain sticky thanks to strong wage growth in recent months. “If we’re continuing to see high wage gains,” Hirt says, “it’s going to be difficult to keep services inflation at that stable 2% level.”

Economists at Wells Fargo say that despite some incremental progress in the past few months, the path down to the Fed’s inflation target is looking “increasingly difficult” in 2025. In a research note last week, they pointed to new headwinds in the form of potential tariffs and tax cuts.

Will the Fed Cut Rates in December?

Wednesday’s CPI release will be the last piece of major economic data the Fed receives before its December meeting next week.

Analysts say a dramatic uptick in inflation could prompt the central bank to pause its rate-cutting cycle this month, but investors aren’t expecting November’s inflation data to meet that criteria. Hirt says an overall monthly inflation print higher than about 0.3% could prompt the Fed to pause.

As of Monday, markets see a roughly 90% chance that the central bank cuts rates by 0.25%, according to the CME FedWatch Tool. That would bring the target federal funds rate to a range of 4.25%-4.50%, a full percentage point below its peak earlier this year.