 "US President elect Donald Trump. Source: Reuters.")
Inflation in the United States ticked up for the second consecutive month in November.
The consumer price index (CPI), a key measure of inflation, rose to 2.7 per cent year-on-year in November, up slightly from 2.6 per cent in October, according to Labour Department data released Wednesday (December 11). The increase, driven by rising food prices and other sectors, aligns with economists’ forecasts.
The inflation trend complicates the Federal Reserve’s deliberations on rate cuts. After a year of falling inflation, the reversal in recent months may prompt the Fed to pause rate reductions to assess the broader impact of its policies.
Challenges for the incoming administration
President-elect Donald Trump has made tackling inflation and reducing the cost of living a cornerstone of his campaign, pledging to deliver relief to households squeezed by rising prices. However, the recent uptick in inflation suggests the road ahead may be more complex than anticipated.
One key challenge is addressing the resilience of the labour market. Despite elevated interest rates, the job market has remained robust, with strong hiring and a low unemployment rate. This strength has supported economic growth but could hinder efforts to bring inflation down without triggering a significant slowdown.
Core inflation, which excludes volatile food and energy prices, remained elevated at 3.3 per cent year-on-year in November. This metric, closely watched by the Federal Reserve, highlights persistent price increases in underlying sectors of the economy.
A tough road ahead?
The incoming Trump administration faces the dual challenge of addressing inflation while sustaining economic growth. Policymakers will need to navigate competing priorities, such as supporting wage growth without exacerbating price pressures.
At the same time, geopolitical factors, supply chain disruptions, and volatile energy markets remain wild cards that could influence inflation trends.
With inputs from agencies