What To Expect From Thursday's Report On CPI Inflation

Inflation Overview - The Consumer Price Index (CPI) is expected to rise by 3.1% year-over-year in November, marking the highest annual inflation since May 2024, up from 3% in September [1][9] - Core inflation is anticipated to remain at 3% year-over-year, consistent with September's figures [1] Impact of Tariffs - Inflation has been steadily increasing since April, primarily due to steep import taxes imposed by the government on nearly all U.S. trading partners, which have led businesses to pass on tariff costs to consumers [2] - Despite some cooling in price increases for categories like rent, overall inflation remains high due to these tariffs [2][9] Federal Reserve's Dilemma - Accelerating inflation complicates the Federal Reserve's goal of maintaining a 2% annual inflation rate, which has not been achieved since 2021 [3] - Some Federal Reserve policy committee members advocate for maintaining high interest rates to curb spending and inflation, but the majority favor rate cuts to support the struggling job market [4] Future Inflation Expectations - Many forecasters predict that inflation will begin to cool later in the year as the effects of tariff price hikes dissipate [7] - Wells Fargo Securities anticipates that while goods inflation may rise temporarily due to tariffs, overall inflation will stabilize around 3% through the first half of 2026, with a gradual decline towards 2% as tariff pressures ease and productivity gains are realized [8]