Inflation likely eased last month, but Fed’s job isn’t over

Inflation is expected to have slowed again last month, though price increases facing U.S. consumers remain near 40-year highs — even as the Federal Reserve raises interest rates at the fastest pace in decades.

The Bureau of Labor Statistics’ November Consumer Price Index (CPI) is scheduled for release at 8:30 a.m. ET on Tuesday.

Economists surveyed by Bloomberg expect headline prices rose 0.3% over the prior month and 7.3% over last year. In October, inflation rose 0.4% over the prior month and 7.7% over the prior year.

Core CPI, which strips out the more volatile food and energy components of the report, is forecast to come in at 0.3% on a monthly basis and 6.1% over the year, little changed from the 0.3% and 6.3%, respectively, seen during the prior month.

The Federal Reserve keeps a closer eye on “core” inflation, which offers policymakers a more nuanced look at inputs like housing. The headline CPI figure, in contrast, has moved largely in tandem with erratic energy prices this year.

While falling oil prices likely sent headline inflation lower last month, economists at Bank of America emphasize the problem for the economy and policymakers remains “under the hood.”

A team led by Michael Gapen said in a recent note the potential decline in core prices may only be the result of holiday discounting and a decline in used car prices, while shelter inflation — the single largest share of the consumer price index — is expected to remain sticky.

“In short, we expect the…

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