Inflation cools in Twin Cities to 5.3%, best since spring 2021

Inflation is fading faster in the Twin Cities than across the rest of the U.S., allowing Minnesotans to get some relief from surging prices that have dominated the past year.

(FOX 9) - Inflation is fading faster in the Twin Cities than across the rest of the U.S., allowing Minnesotans to get some relief from surging prices that have dominated the past year.

Prices rose in November at 5.3% over the year in the Twin Cities, down from a peak of 8.7% in May and the slowest pace of increases since spring 2021. U.S. inflation was 7.1% in November.

Gas prices in Minneapolis-St. Paul tumbled this fall. The average price for a gallon of regular gas was $3.09 this week, down from an average of $4.76 in June. Some of that decline happened in December, meaning it wasn't fully factored into November's inflation report that showed gas prices declining 4.8% over the previous two months.

Food prices were up 1% over the same two-month period, a slower pace of increases than earlier in the year.

Goods prices contributed significantly to lower inflation. Apparel prices have fallen 10.1% since September, while used cars and trucks were off 5.3%. Rents, which increased 3% over the two-month period, are now a main driver of inflation. There are signs that rent increases have slowed in recent months, but the nature of long-term leases means it takes time for pricing changes to cycle through the calculations.

U.S. inflation of 7.1% was down from the peak of 9.1% in June, though it remains far higher than the Federal Reserve's 2% target.

The inflation report means the Fed is likely to start slowing the pace of interest rate increases to 0.5% at its Wednesday meeting, down from 0.75% increases at its last four meetings. The Fed has been increasing its benchmark rate at the fastest pace in four decades to cool consumer demand and get inflation under control.