Inflation Continues to Cool in November Except for Housing

By Fan-Yu Kuo ,
Economist at National Association of Home Builders
December 13th, 2022

Consumer prices in November saw the smallest year-over-year gain since December 2021. While still elevated, inflation
experienced the second month below an 8% annual growth rate since February 2022. However, the shelter index continued to rise at an accelerated pace and more than offset decreases in energy indexes. Shelter inflation will be primarily tempered in the future by increased housing supply.

As inflation appears to have peaked and continues to slow, this may ease pressure on the Fed to maintain a more aggressive monetary policy. The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% in November on a seasonally adjusted basis, following an increase of 0.4% in October. The price index for a broad set of energy sources fell by 1.6% in November as the gasoline index (-2.0%), the natural gas index (-3.5%), and the electricity index (-0.2%) all declined.

Excluding the volatile food and energy components, the “core” CPI increased by 0.2% in November, following an increase of 0.3% in October. This is the smallest monthly increase since August 2021. Meanwhile, the food index increased by 0.5% in November, with the food index at home also rising 0.5%.