US inflation report may show further slowing of price spikes

WASHINGTON (AP) — A high-profile report on inflation to be released Tuesday morning could show another month of cooling prices and add to evidence that the pressures on American households are gradually easing.

A milder inflation report would also encourage optimism that the Federal Reserve will suspend its interest rate hikes sometime early next year.

Economists have forecast that consumer prices rose 7.3% in November compared with a year ago, according to the data provider FactSet. Though still uncomfortably high, that would fall well below a recent peak of 9.1% in June and would amount to the fifth straight year-over-year slowdown in inflation.

Gas prices have dropped from their mid-summer highs and are lower than they were a year ago. Many supply chains have unsnarled, helping lower the costs of imported goods and parts. Prices for lumber, copper, wheat and other commodities have also fallen.

Fed officials and economists will focus more on Tuesday's month-to-month inflation figures for a better read on where prices might be headed. Prices are expected to have risen 0.3% from October to November, which would extend a streak of slowdowns. Measured month to month, inflation had soared 1% in May and 1.3% in June but has averaged just 0.2% over the past four months.

To some economists and Fed officials, such figures are a sign of improvement, even though inflation remains far above the central bank's annual 2% target and might not reach it until 2024.

Fed Chair Jerome Powell has said he is tracking price trends in three different categories to best understand the likely path of inflation: Goods, excluding volatile food and energy costs; housing, which includes rents and the cost of homeownership; and services excluding housing, such as auto insurance, pet services and education.

In a speech two weeks...