WASHINGTON—Overall consumer prices increased 0.4% in November. That included a 3.9% increase in energy prices, which "accounted for about three-fourths of the headline gains," said NAFCU Chief Economist and Vice President of Research Curt Long.
"Core inflation, on the other hand, grew at a more sluggish pace," Long said in a NAFCU Macro Data Flash report. "Growth was weighed down by substantial declines of apparel prices and airline fares. The former saw a 1.3% drop in November; its largest decrease since 1998."
Consumer prices saw a 0.1% increase in October. For the 12-month period, the overall consumer price index (CPI) rose 2.2%, after showing 2% growth in October, Long said.
Data published by the Bureau of Labor Statistics found that core prices (excluding food and energy costs) increased 0.1% in November compared with the previous month. Year-over-year core CPI growth edged down to 1.7%. From a year ago, energy prices were up 9.5% and food prices were up 1.4%, Long said.
Personal consumption expenditure (PCE) inflation, the Federal Reserve’s preferred measure, grew 1.6% year over year (seasonally adjusted) in October. PCE inflation has been below the Fed's 2% target since February, Long noted.
"Tax reform could provide support for price growth in the coming year," Long said. "That possibility notwithstanding, Fed officials have begun to express doubts as to the likelihood that inflation will return to target in the near future, which could result in a slower pace to monetary policy tightening."