The disinflation process has stalled even as the inflation numbers came in line with expectations. Core goods and energy stopped acting as a drag, which may keep Wednesday’s bond rally in check.
The breakdown in November CPI data shows that all categories saw a rise, for the first time since February. Two key drivers of disinflation — core goods and energy — are seeing renewed price pressures, which isn’t good news for an economy bracing for the impact of tariffs.
Drilling further into goods, which saw their biggest increase this year so far, transportation and household furnishings and supplies drove the jump, also posting their largest increases of the year.
The CPI report may be tame on the surface, however, the details are a bit more concerning that the headline suggests. They also don’t quite justify solidifying wagers for a December interest rate cut from the Fed.