US inflation edges down to 3.1% in November

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US inflation edged lower to 3.1 per cent for November, bolstering arguments by Federal Reserve officials that interest rates should remain at current levels during the spring.

The headline consumer price index figure fell marginally below October’s 3.2 per cent, in line with expectations.

The core measure — which strips out changes in the price of energy and food, and is seen as a bellwether for longer-term inflation — remained flat at 4 per cent.

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The Bureau of Labor Statistics figures come just a day before Fed officials vote on interest rates.

Rate-setters prefer to watch a less volatile index — personal consumption expenditures — to measure inflation, and are seeking evidence that it is heading back to their 2 per cent target. They also want confirmation that inflation in the services sector, not including rent increases, is moderating.

But this month’s CPI reading was published more than a fortnight ahead of the PCE data, and could influence how willing Fed chair Jay Powell is to push back on markets’ expectations of rate cuts as soon as March.

Markets were relatively stable after the data was released.

The yield on the two-year US Treasury note, which is particularly sensitive to short-term interest expectations, was down 0.05 percentage points for the day at 4.67 per cent — in line with its position earlier in the afternoon. The benchmark 10-year yield was down 0.04 percentage points for the day at 4.2 per cent.

Additional reporting by Kate Duguid in New York


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