The U.S. Bureau of Labor Statistics reported the consumer price index rose 0.1% in November. Over the last 12 months, the all items index is up 7.1% before seasonal adjustment as compared to 7.7% in October. This is the second time since February that the annual increase in the CPI was reported below 8%. The CPI peaked at 9.1% in June, the fastest rate since 1981. On a monthly basis, the all items index is up (+0.2%), and follows October’s (+0.3%) reading, and (+0.4%) in September. Continuing a trend, the index for shelter (+0.6%) was a primary contributor to the monthly all items increase. The indexes for communication (+1.0%), recreation (+0.5%), motor vehicle insurance (+0.9%), personal care (+0.7%), education (+0.3%), and apparel (+0.2%) were among those that increased over the month. Offsetting the increases were declines in used cars and trucks (-2.9%), medical care (-0.5%), and airline fares indexes (-3.0%). Core CPI inflation rose (+0.2%) in November, it is the smallest increase since August 2021. The annual rate of core CPI inflation is now at 6.0%. The shelter index is up 7.1% year over year and accounts for nearly 50% of the total increase in Core CPI.

The Federal Open Market Committee (FOMC) announced the raising of its benchmark federal funds rate by 50 basis points, putting it in the range of between 4.25% and 4.50% — the highest level since December 2007. This is the seventh rate hike since March and follows four consecutive FOMC meetings ending with a 75 basis point climb. The FOMC statement mirrored previous releases stating “The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time”. FOMC members projected increases in the 2024 funds rate until it hit a median level of 5.1%, equivalent to a target range of 5.0%-5.25%, this is up from the 4.6% forecast in September. The median forecast for the 2024 funds rate is projected to drop to 4.1% and then further to 3.1% in 2025. The FOMC also lowered its growth forecast for 2023, putting the expected GDP increase at 0.5%, in the September projections, the committee had expected 1.2%.

The Commerce Department reported advance U.S. retail and food services sales were down 0.6% to $689.4B in November, a significant drop from October’s 1.3% increase. This is the third negative reading in the past five months. Retail sales are up 6.5% year over year. Total sales for September 2022 through November 2022 period were up 7.7% year over year. A primary contributor to the slowdown was a 2.3% decline in motor vehicle & parts dealers. The sales decline was broad-based with sales falling at department stores (-2.9%), home furnishings (-2.6%), garden centers (-2.5%), appliance (-1.5%), internet retailers (-0.9%), and gas stations (-0.1%). Restaurants, the only services category increased (+0.9%) for the month and is up (+14.1%) year over year. Offsetting the decreases were increases in sales for personal care (0.7%) and miscellaneous retail (+0.5%). When sales for gas stations and autos are excluded, retail sales decreased by 0.2%. Core retail sales, a measurement that excludes spending on autos, gasoline, building materials, and food services decreased by 0.2% in November. October’s core retail sales were revised to show sales increasing by 0.5% instead of 0.7%.