US CPI growth slows a bit more than expected in November

The cost of living in the US slowed a bit more quickly than anticipated in November, as energy and used vehicle prices continued to retreat.

According to the Department of Labor, the year-on-year rate of increase in the headline Consumer Price Index slipped to 7.1% (consensus: 7.3%).

At the core level meanwhile, the annual rate of increase slipped to 6.0% (consensus: 6.1%).

In month-on-month terms, headline CPI increased by 0.1% and core CPI by 0.2%, whereas economists had penciled in rises of 0.3% for both.

Also in comparison to the month before, food price inflation decelerated from a 0.6% gain in October to 0.5%.

Meanwhile, energy prices fell by 1.6% on the month, nearly reversion the prior month's increase.

Outside of food and energy, at the core level, used car and truck prices dropped by 2.9% and those for medical care services by 0.7%.

Shelter costs rose by 0.6% on the month, versus a 0.8% rise in October.

For Paul Ashworth, chief North America economist at Capital Economics, November's CPI print would make it that much harder for the Fed to dismiss the previous month's better-than-expected figures as a one-off.

"The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our long-held view that mounting disinflation will soon persuade the Fed to move to the side line after one 25bp hike in early February."

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