The federal government on Thursday offered a fresh snapshot of how much prices have risen at grocery stores, clothing shops, gas stations and car dealerships.
The Bureau of Labor Statistics said its November inflation reading came in at 2.7 percent.
That was well below investors’ expectations for a hotter 3.1 percent report — one that would have pushed inflation to its highest level in more than a year.
Markets welcomed the data. Futures for all three major US indexes moved higher after the report’s release.
Before the bell, Nasdaq futures climbed 1.5 percent, S&P 500 futures rose about 0.9 percent, and Dow futures — which had been in the red earlier in the morning — edged up 0.5 percent.
Thursday’s reading also marked a slowdown from the previous inflation report, which showed prices rising 3 percent in September.
The BLS skipped October’s report. The data, which was due in late November, didn’t come out as government workers were furloughed during the 43-day government shutdown.
‘While the November print is admittedly noisy, it offers hope to a different inflation narrative than what we’ve seen over the past six months,’ Bret Kenwell, an investment analyst at eToro, told the Daily Mail.
The Bureau of Labor Statistics released November’s inflation reading – the data skipped October’s price hikes because of the government shutdown
‘We’ll need to see further inflation data confirm this narrative change.’
November’s readings did have some potential warnings: in the past year, energy prices rose 4.2 percent, restaurant prices jumped 3.7 percent, and medical care service prices increased 3.3 percent.
But grocery prices (1.9 percent), gasoline prices (0.9 percent), and clothing prices (0.2 percent) all came in below the government’s two percent target.
The cooler-than-expected reading also comes as President Donald Trump launches his bid to convince Americans about the benefits of his economic policies.
Last night, during an 18-minute speech, he claimed he had ushered in a ‘Golden Age’ of America, including his work on prices.
‘I am bringing those high prices down, and bringing them down very fast,’ the President said.
Today’s reading will also likely have an enormous impact on Americans’ 401(k) accounts.
The Federal Reserve, which meets again on January 28 to discuss America’s benchmark interest rate, has cut the benchmark to 3.5 percent after a downturn in the jobs market.
Investors were excited about Thursday’s inflation news, bumping stock futures into the green
The Fed has two goals: maximum employment and stable prices in the US economy.
Its main tool, the benchmark interest rate, swings up when consumers see higher prices and plunges when Americans start losing their jobs.
On Tuesday, the number of Americans claiming unemployment jumped to 4.6 percent, the highest reading in four years.
Now, with the shaky jobs outlook and the cooling inflation figure, investors are betting that the Fed will continue to slash interest rates.
Lower rates make borrowing cheaper for businesses and consumers alike, encouraging spending and investment.
That, in turn, can boost hiring as companies expand operations to meet rising demand.
And, that could boost investors’ holdings.
‘For investors, the immediate reaction is relief,’ Kenwell said.
‘Although this is just one inflation reading — and admittedly not the Fed’s preferred inflation gauge — easing inflation concerns could open the door to a more accommodative Fed moving forward.’
