Inflation barely increased last month

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So, what does that mean for your money?

Inflation was relatively flat last month as the Labor Department’s Consumer Price Index (CPI) rose just 0.1% from October. Over the last 12 months, inflation has averaged 3.1%, down from the June 2022 peak of 9%.

That suggests the Federal Reserve’s policy of hiking interest rates has been effective in bringing down prices. In November, gas prices were down, along with most energy commodities.

Used car prices continued to fall while the increase in grocery prices continued to slow, rising just 01.%, a much slower rate than restaurant prices.

One area where inflation remains fairly hot is in the labor market, which – if you're looking for a job – isn't so bad. But Oliver Rust, head of Product at Truflation, says that can contribute to higher prices

“We expect the strong employment situation will continue to put upward pricing pressure on services,” Rust told ConsumerAffairs. “As a result, we see the headline CPI index rising again to 3.5% by year-end. It will likely remain elevated for longer than anyone anticipates, so bringing the index down to the 2% target will be a difficult task for policymakers.”

If you had money in stocks or Bitcoin in November, you did very well. Wall Street enjoyed a strong rally on the belief that the Fed is getting inflation under control and will stop raising interest rates. 

Bitcoin remains volatile, selling off sharply this week after a huge rally in November that took the price of the digital currency to $43,000.

Hoping for a ‘soft landing’

But a “soft landing” – falling inflation without a recession – is far from certain and some traders have hedged their bets by purchasing gold. Though prices are at a three-week low this week, there are plenty of tailwinds that can provide support. For one, central banks and governments around the world have increased their purchases of the precious metal in 2023.

Bond yields are down from their recent highs but savers can still find certificate of deposit (CD) rates above 5%. According to Forbes, this week’s highest CD rate is 5.87% APY for a one-year CD. As an added benefit, the money is insured up to $250,000 by the Federal Deposit Insurance Corporation.

So, as economic conditions begin to reveal themselves, where’s the best place to put your extra cash? It’s advisable to consult an objective and trusted financial adviser before making any major moves.

But one legendary investor has made moves this year that suggest he is erring on the side of caution. Berkshire Hathaway Chairman Warren Buffet got Wall Street’s attention this week when it was disclosed that he sold more than $28 billion in stock in the first three quarters of 2023.

The question marks hanging over the economy may persist for at least another month.

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