By Geoffrey Smith
Investing.com -- Headline inflation in the U.S. fell by more than expected in November to its lowest level this year, according to new data released on Tuesday.
Consumer prices rose 0.1% from October and were up 7.1% from a year earlier, the Bureau of Economic Analysis said, as a drop in energy prices took the sting out of another chunky increase in shelter costs. Excluding volatile fuel and energy components, the 'core' CPI index rose 0.2% on the month and 6.0% on the year, representing a clear slowdown from October's 6.3%.
Headline inflation has now fallen for five months in a row, but still remains more than three time the Federal Reserve's target level of 2.0%. Analysts expect the year-on-year rate to ease further as the sharp rises in oil and other energy prices at the back end of last year pass out of the equation.
The numbers bolstered hopes that the Federal Reserve will be able to soften its guidance on Wednesday when Chair Jerome Powell announces what is expected to be a 50 basis point increase in the target range for fed funds. S&P 500 Futures rose and the dollar fell as market participants moved to price in a lower trajectory for U.S. interest rates going forward.