November’s Consumer Price Index (CPI) showed that inflation rose 0.1% compared to October, just above the consensus estimate of a flat reading. On an annual basis, CPI fell from 3.2% to 3.1%, near the lowest level in more than two years. Core CPI, which strips out volatile food and energy prices, increased 0.3% while the annual reading remained at 4%, a two-year low.

Declining energy prices helped keep inflation in check last month, even in the face of rising costs for used cars, motor vehicle insurance, and health insurance.

What’s the bottom line? Inflation has made significant progress lower after peaking last year, with the headline reading now at 3.1% (down from 9.1%) and the core reading at 4% (down from 6.6%). The Fed will be closely watching for further progress on inflation as they consider pivoting to rate cuts next year.