US Consumer Prices Rise at Highest Pace in 7 Months

U.S. consumer price index rose at the highest pace in 7 months in November, but that would not be likely to deter the Federal Reserve from cutting interest rates for the third time next week on the back of a slowing labor market.

The US Department of Labor's Office of Labor Statistics said on Wednesday that the consumer price index rose 0.3% last month, the largest gain since April after rising 0.2% for four consecutive months. In the 12 months to November, the consumer price index rose 2.7% after rising 2.6% in October.

Economists polled by Reuters expected the consumer price index to rise by 0.3% and advanced by 2.7% year-on-year.

The annual rise in inflation has slowed significantly from a peak of 9.1% in June 2022. However, progress in reducing inflation to the US central bank's target of 2% has effectively stopped in recent months.

The Federal Reserve is now focusing more on the labor market. Although job growth accelerated in November after being hit hard by strikes and hurricanes in October, the unemployment rate rose to 4.2% after remaining at 4.1% for two consecutive months.

Early on Wednesday, financial markets saw an 86% chance of a 25-basis-point interest rate cut at the Federal Reserve's monetary policy meeting on December 17 and 18, according to CME Group's FedWatch instrument.

However, there are expected to be fewer interest rate cuts next year compared to what was expected a few months ago.