Consumer prices rose less than expected in November, up 7.1% from a year ago

The runaway inflation that has been gripping the economy is starting to loosen up after prices rose less than expected.

The Labor Department reported Tuesday that the consumer price index increased 7.1% from a year ago. The economists were expecting a small monthly increase and a larger 12-month increase.

The increase from a year ago was well above the Federal Reserve's 2% target for a healthy inflation level.

Excluding volatile food and energy prices, the core consumer price index rose 2% on the month and 5.6% on the year.

After the report, the stock market roared higher, with futures tied to the DJIA up more than 800 points.

Robert Frick, corporate economist with Navy Federal Credit Union, said that cooling inflation would boost the markets and take pressure off the Fed for raising rates. Lower-income Americans are disproportionately affected by inflation.

Inflation was kept under control by falling energy prices. There was a 2% decrease in gasoline for the month. The food prices were up from a year ago. The energy index was higher in November of 2016 than it was in October of that year.

Shelter costs rose 0.6% on the month and are now up 7.1% on the year.

Workers were given a lift after months of seeing wage increases fall short of inflation. Real average hourly earnings were down 1.9% from a year ago.

The rate-setting Federal Open Market Committee starts its two-day meeting on the same day as the inflation report. Markets expect the FOMC to raise the rate by a half point on Wednesday.

The Fed could dismiss the better-than- expected October as just one month's data, but the further slowdown in November makes this new disinflationary trend harder to dismiss.

In the spring of 2021, prices increased at their highest levels since the early 1980s due to a combination of factors.

There was a supply and demand imbalance brought on by the Pandemic, Russia's invasion of Ukraine, and trillions of dollars in fiscal and monetaryStimulus that sent an abundance of money chasing too few goods that were caught up in supply chain problems

The price of used vehicles fell for the month and are down from a year ago. As recently as February, the used cars and truck index was up more than 40% on an annual basis, the result of higher demand as a chip shortage caused a back up in car production.

The medical care services costs were up 4.4% annually.

The HeadlineCPI peaked at 9% in June 2022, but has been on a decline ever since.

Federal Reserve officials started raising interest rates in March after dismissing the inflation surge astransitory. The central bank has raised its short-term borrowing rate six times in the last year.

Excluding shelter costs will be an important component in determining future monetary policy moves, according to Fed Chairman Powell. The gauge was little changed in November, but is up over the course of the year.