Volkswacht Bodensee - US consumer inflation rises for second straight month in November

The consumer price index (CPI) rose to 2.7 percent last month from a year ago, up slightly from 2.6 percent in October, the Labor Department said in a statement.

This was in line with the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.

On a monthly basis, headline inflation rose 0.3 percent, propped up by stubborn housing costs.

Several other indexes also edged higher, including food, energy, medical care and recreation, the Labor Department said.

The back-to-back increases add to the challenges the Fed faces returning inflation to its long-term target of two percent, potentially slowing the pace of rate cuts over the coming months.

The US central bank recently began dialing back interest rates from a two-decade high, and its benchmark lending rate currently sits at between 4.50 and 4.75 percent, down three quarters of a percentage-point from September.

The financial markets overwhelmingly expect the Fed to make another quarter point cut next week, according to CME Group data. This will be the last Fed rate decision before President Joe Biden hands over to incoming Republican Donald Trump.

"The data suggests that progress towards lower inflation is stalling, so either the Fed will accept a higher inflation target or it will have to pause after next week's meeting," CMC Markets chief market analyst Jochen Stanzl wrote in a note.

"The latter is more likely, especially as the labor market is still robust and doesn't need the Fed's immediate attention," he continued, adding the Fed was not "more likely" to slow the pace of rate cuts over the coming months.

The US labor market has proven to be relatively resilient to high interest rates, despite some recent signs of weakness, with hiring still strong and the unemployment rate remaining close to historic lows.

At the same time, economic growth has been robust, giving the Fed an excuse to pause rate cuts in the coming months to see how its fight against inflation unfolds, should it wish to.

The US consumer inflation rate slowed for much of this year, falling to 2.4 percent year-on-year in September, before reversing course in recent months.

That could pose a challenge for the incoming Trump administration, which made tackling inflation and the cost of living a top priority on the campaign trail.

A measure of inflation that strips out volatile food and energy costs known as core inflation came in at 3.3 percent in the year to November, and by 0.3 percent from October, according to the Labor Department.

This was in line with expectations.

K.Hofmann--VB