The CPI is the most widely followed gauge of U.S. inflation.
Part of the weakness in the November CPI figures reflects a big drop in energy, led by a 10.1% fall in gasoline prices. Food prices were also a drag on the report, slumping 0.1% following the surprisingly strong gain of 0.5% in October.
As for the core rate, much of the gain was due to rising costs for services such as lodging and hospital stays. Core prices rose on a sharp upturn in the price of tobacco (+3.9%), coupled with larger increases in the indexes for shelter (+0.4%) and for new vehicles (+0.6%). Also boosting core prices was a 1.7% rebound in lodging away from home after sharp declines in the two months following the September 11 terrorist attacks. Medical care costs also rose 0.5%, leaving this series growing at a 4.8% year-over-year rate -- one of the highest in the report.
Overall, despite recent weakness in several other price-related measures, the CPI data doesn't pose much of a threat: The economy still is weak, and the Fed could further slash interest rates to stimulate growth. From Standard & Poor's MMS