Inflation isn’t trending positively.

In November, U.S. inflation increased for the second consecutive month primarily due to higher food and gasoline costs, indicating that the Federal Reserve’s ongoing efforts to address surging prices are becoming increasingly difficult.

According to the Labor Department’s consumer price index—a commonly used measure of overall goods and services expenses—consumer prices rose 2.7% over the past year, up from 2.6% in October. This marks the second rise after six months of declines, leaving annual inflation slightly above the Fed’s target of 2%. Economists polled by Bloomberg had predicted a rise to 2.7%.

Monthly costs climbed 0.3%, the largest increase since April.

What does core inflation mean?

Core inflation, which excludes fluctuating food and energy prices and is more closely monitored by the Fed, rose by 0.3% for the fourth consecutive month, maintaining an annual increase of 3.3% for the same duration.

The Fed pays special attention to these persistent price trends because they are influenced by consumer demand, which can be adjusted using interest rates. In contrast, food and energy prices tend to fluctuate significantly due to global commodity price changes, such as those for oil and wheat.

Is inflation genuinely decreasing?

After reaching a 40-year peak of 9.1% in mid-2022, inflation has generally decreased but remains relatively high. Prices for services like car insurance and repairs continue to rise, partly due to increased labor costs and car prices following the COVID-19 pandemic.

Meanwhile, prices for goods that had previously seen a decline due to resolved COVID-related supply chain issues have stabilized or slightly increased, indicating that the benefits from overcoming the health crisis may be diminishing.

Barclays anticipates that inflation will decrease to 2.1% by spring, but may rise again to 2.6% by the end of 2025 due to import tariffs threatened by President-elect Donald Trump, should they be implemented. They also predict that core inflation will end next year at 3.1%, remaining fairly constant.

Is the Fed likely to reduce rates in December?

Despite the recent stagnation in inflation progress, economists do not believe it will deter the Fed from lowering its main interest rate by a quarter percentage point in the upcoming meeting, as they continue to adjust rates to align more closely with normal levels due to slowing price increases. However, this may lead to fewer rate cuts in the upcoming year, economists suggest.

Since September, the Fed has reduced its key rate by three-quarters of a percentage point, as the inflation situation improved. In 2022 and 2023, officials raised rates from near zero to between 5.25% and 5.5% in response to a surge in prices triggered by the pandemic.

Are food prices still on the rise?

Grocery prices surged by 0.5% after a year of mostly minor increases, marking the highest jump since January 2023.

Last month, egg costs soared by 8.2% due to a two-year bird flu crisis. Uncooked ground beef saw a 0.5% increase, while bacon prices rose by 0.3%.

On a positive note, the prices of bread dropped by 1.3% and rice by 0.3%, with breakfast cereal prices remaining unchanged.

In contrast, restaurant prices continued to rise due to increased labor costs, climbing 0.3%.

What’s causing gasoline prices to rise?

While gasoline prices fell by 3% in November, they actually increased by 0.6% when adjusting for seasonal trends, as they typically drop more significantly as winter approaches. Hurricane Rafael affected Gulf Coast refineries, maintaining prices at a higher-than-usual level, according to AAA.

Pump prices had previously remained flat or decreased for six months due to slowing global growth and record levels of U.S. oil production. Regular unleaded gasoline averaged $3.01 a gallon on Tuesday, down from $3.08 last month and $3.16 a year earlier.

Are rent increases slowing down in the U.S.?

There is good news for renters.

Rent prices rose by only 0.2% in November, following a 0.3% increase the prior month—this is the smallest monthly increase since July 2021. As a result, the annual rent increase fell from 4.6% to 4.4%, marking a 2 ½ year low. The decline in rental prices for new leases is finally affecting the rates for existing tenants.

This is promising as housing costs have been a major contributor to inflation, accounting for 36% of the total price rise last month.

Nonetheless, prices for other services have continued to rise. Hotel costs surged by 3.2%; airfares increased by 0.4%, continuing a recent trend; and medical expenses also rose by 0.4%.

Some favorable price movements were noted, with used car prices climbing by 2% after a 2.7% increase the prior month, while new cars rose by 0.6% and appliances 0.7%.

This article has been revised to include updated details.