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Inflation in the US is slowing down to 3.1 per cent, the lowest in two years, signalling continued moderation of consumer price increases. That’s a bit slower than the inflation in October’s prices, as last month the CPI was up 3.2 per cent over the previous month.

The US government said that prices for consumers inched higher in November, but the pace of inflation continued to slow down from last year, media reports said.

The Bureau of Labor Statistics released its consumer price index on Tuesday, saying that overall prices for urban consumers rose 0.1 per cent in November as compared to October. The agency said gasoline prices fell sharply and, overall, energy prices are down 9.8 per cent over the last year.

But in November, that was cancelled out by greater costs for shelter. Those prices are up 6.5 per cent in the last year, NBC news reported.

"The best news for consumers right now is of gas prices, which have fallen in late 2023 as domestic oil production hit a new record high," Bill Adams, Chief Economist for Comerica Bank, told NBC News.

"The biggest sore point for consumers is food, which is at a record high, and shelter (homes) prices, where inflation is high as measured by CPI."

Inflation has slowed down in the last few months after it surged to a 40-year high of 9.1 per cent in June 2022. Though slower inflation results in the prices of many goods still going up, the more gradual pace makes it easier for consumers to adjust, and for increased wages to help counteract the financial pain that inflation causes, economists said.

There are some signs that consumers are feeling better about the state of the economy as inflation cools off, even though they're feeling pressure from high credit card interest rates and high housing costs.

If inflation becomes steady or continues to fade, it's more likely the Federal Reserve will keep interest rates where they are instead of raising them further.

The Fed, which will make its last interest rate call of the year on Wednesday, sharply raised rates from early 2022 to mid-2023 to try to contain inflation.

The results run along expected lines as economists had projected the data would show that overall prices were unchanged in November as compared to October. The government said that excluding the volatile costs of food and energy, “core” prices rose 0.3 per cent. That more or less matched the forecasts made by the economists.

“Though this would represent acceleration at the core relative to October, we see this as mainly coming from a reversal in the volatile lodging away from home category,” a team of economists from Bank of America wrote this month, referring to travel and hotel accommodations in its estimation.

Compared to November 2022, the Bureau of Labor Statistics said that prices were up 3.1 per cent while core prices rose 4 per cent.

Economists expected a 3 per cent increase in the overall price index, and a 4 per cent increase in the core categories. That’s a bit slower than the inflation reflected in October’s prices, as last month the CPI was up 3.2 per cent over the previous year. And core prices were the same at 4 per cent.

That's the reason interest rates on items such as credit cards and mortgages have increased so quickly over the last year-and-a-half. But as investors and experts think that the Fed might not raise rates again in the near future, their expectations for long-term rates have started to come down. And in turn, that's brought mortgage rates down a bit recently.

The government-backed lender Freddie Mac said the rate on a 30-year fixed-rate mortgage is now about 7 per cent, down from around 8 per cent in early October.

Bill Adams said the Fed could start to reduce interest rates in mid-2024, but it won't hurry to do so.

"After missing their inflation target badly in 2021 and 2022, the Fed would rather hold rates high for longer than necessary than cut too early and see inflation pick back up again," he said.