Food inflation slowed in November.
Food prices rose 10.6% last month compared with a year ago, down from 10.9% in October, according to government data released Tuesday.
Grocery prices, categorized as “food at home,” rose 12% last month, down from 12.4% in October. The cost of dining out rose 8.5% in November, down slightly from 8.6% October.
Food-price increases have had an impact on household spending. Several low-income families told MarketWatch in October that they could not afford to buy meat, while others have had to juggle utility payments and grocery bills.
The overall rise in the cost of living was 7.1% in November, down from 7.7% in October and marking the lowest level since the end of 2021.
Inflation eased for the third consecutive month in November. Annual food inflation peaked in August at 11.3%, the highest level in 40 years.
The so-called core rate of inflation, which leaves out food and energy, rose 0.2% on the month, the smallest gain since August 2021. Wall Street had forecast a 0.3% increase.
The price of eggs rose 49.1% on the year in November
Double-digit inflation persists for some food items. Bakery products such as bread and cookies were 16.3% more expensive than last year, rising 1% on the month.
Eggs were 49.1% more expensive in November than last year, up 2.3% on the prior month. An outbreak of avian flu earlier this year hurt egg production and led to a spike in prices. Butter was 27% more expensive than last year.
The price increase for labor-intensive manufactured food remains high. Lunch meats were 18.4% more expensive than last year, while prices of processed fruits and vegetables increased by 15.8%.
Pork prices remained stable, rising by just 1.2% year over year. Prices for fresh fruits and vegetables rose by 8% in November over the same period a year ago.
Cooling inflation may give Federal Reserve more leeway
Some analysts say the Federal Reserve will likely now have more room to make a 50-basis-point interest-rate hike this week, rather than another 75-basis-point increase.
The Fed raised has interest rates by 75 basis points four times since June.
“With official figures at least one month behind the true inflationary picture on the ground, the U.S. Federal Reserve would be wise to be forward-thinking when considering its next interest-rate decision today and tomorrow,” Oliver Rust, head of product at inflation-data aggregator Truflation, said in a statement.
“However, Chairman Jerome Powell should be prepared to pump the brakes,” he added. “If the Fed keeps hiking into a fast-paced inflationary decline it could trigger a steeper downturn than the central bank — or the U.S. economy — is ready for.”
Consumer prices are not rising as quickly now as they were earlier in the year, but economists and Fed officials say inflation likely won’t return to the pre-COVID level of 2% until 2024 or even 2025.