Not all inflation news was good: Grocery prices jumped 12.0% in November

Not all the inflation news was cheery.

Backing out volatile gasoline and food prices, inflation in the U.S. slowed again last month, up 7.1% year-over-year. That was lower than economists' exception of a 7.3% increase, per Bloomberg data.

Still, the latest report was not great news for grocery shoppers: Food prices in November rose 12.0% year-over-year.

On monthly basis, the category increased by 0.5%, according to the Bureau of Labor Statistics' (BLS) November Consumer Price Index (CPI). That's compared to an increase of 0.4% in October 2022, which was the lowest jump since December of 2021 on a month-to-month basis.

The silver lining: BLS economist Steve Reed told Yahoo Finance that compared to the summer months, which saw a 1 or more percent increase month-over-month for groceries, there's been a deceleration. He said this month-over-month change of a 0.1% higher than October can be seen as more or less the same.

One key reason why the consumer price index for food at home didn't get "an extra deceleration this month"? The price of fruit and vegetables: up 1.4% overall, with apples (up 3.2%), citrus fruits (up 2.8%), lettuce (up 8.9%), among spikes.

Reed noted on a call that while the price jumps are not "outrageous" given recent context, "it's enough…to give us that larger increase last month."

In the past year, the cost of fruits and vegetables was impacted by weather conditions, the cost of production and transportation to get the goods to stores, in addition to higher costs for fertilizer and fuel.

Other foods price jumps on a monthly basis: eggs (up 2.3%), which was far lower than October's 10.1% month-over-month jump, flour and prepared flour mixes (up 1.5%), fresh biscuits, rolls, muffins (up 2.2%), cakes, cupcakes and cookies (up 1.3%), dairy (up 1.0%), and ham (excluding canned, up 0.8%).

Items that saw a decline month-over-month include meats, poultry, and fish (down 0.4%), potatoes (-1.4%), dried beans, peas and lentils (down 0.7%), and sugars and sweets (-0.3%).

Fats and oils saw no change change month-over-month, but year-over-year they are still up significantly, 21.8%.

One aspect of November's CPI data that is encouraging though is moderation in energy and gasoline costs, which in turn impacts of the cost to produce and transport food, Reed said.

In the month of November, the overall energy sector decreased 1.6% with fuel in particular, down 2.1%.

Prices are still much higher for than this time last year though, energy is up 13.1% for the overall category with fuel oil up 65.7%.

Investors seemed encouraged by the overall report on Tuesday, with all major indices moving higher in early trading. Also, on Wednesday, members of the Federal Open Market Committee (FOMC) are poised to lift rates by 50 basis points, a slowdown from the 0.75% increases delivered over the past four meetings, Alexandra Semenova reported.

Economic Cycle Research Institute Co-Founder Lakshman Achuthan told Yahoo Finance that inflation already peaked and "we can lay that to rest," but it's not all hunky dory.

The "problem is that it's sticky, it's (not) going down…fast enough for the Fed to do any pivoting anytime soon in terms of actually cutting rates," he said. "I think what the market is hoping for….is that there's light at the end of the tunnel and they're going to cut really soon. It's going to take a much sharper drop in inflation for that to happen and I think we'll get there."

When might we get there? Well, it'll happen with a recession, Achuthan added.

And that's a problem, too, "because a recession really brings down those prices really fast and so, be careful what you wish for."

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected]

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