On Tuesday, we received the final Consumer Price Index (CPI) report for 2023, providing insights into November’s numbers. The CPI figure for November showed a 3.1% increase compared to the same month last year, a slight decrease from the 3.2% reported in October. In essence, inflation continues to follow a favorable path, aligning with the Federal Reserve’s 2% target, which is considered a crucial milestone before deeming the mission accomplished.

Noteworthy trends in November include a significant decline in gasoline prices, contributing to the overall decrease, while housing costs have remained elevated. The chart below shows the inflationary ride we’ve been on from its start in January 2021 to the present.

(Source: CNBC)

Individuals who closely follow these reports often critique them for being retrospective in nature. To overcome this limitation, we have turned to real-time indicators developed recently to assess their correlation with the CPI report. Notably, Truflation presents a similar figure, indicating a 3.04% year-over-year growth. However, the path to getting there looks quite different.

(Source: Truflation)

According to the chart above, inflation reached its lowest point at 2.05% on June 9th of this year and has since experienced a slight acceleration, currently standing at 3.04%. Although the current rate of 3% is an improvement compared to a year ago, the trajectory of inflation is what we pay close attention to as it could dictate the Federal Reserves policy going forward.

Presented by the Financial Planning Committee of Lake Street, an SEC Registered Investment Adviser

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