The victory dance on inflation will have to wait.

Inflation has stabilized late this year at well below last year’s high but still above prepandemic levels, tempering hopes for near-term Federal Reserve rate cuts and maintaining price and interest-rate pressures on weary Americans.

The consumer-price index rose 3.1% in November from a year earlier, a slight slowdown from October but above June’s 3% reading, the Labor Department said Tuesday. Prices were up 0.1% from the prior month, stronger than the steady reading economists had expected.

The tepid pace of improvement was “mildly disappointing, but trends remain favorable,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. Cost declines for gasoline and long-lasting goods last month mostly offset price increases for housing, auto insurance and some other services.

Core prices, which strip out volatile food and energy components, rose 0.3% from the prior month, faster than would be consistent with the Federal Reserve’s long-term inflation target of 2%. Core costs rose 4% in November from a year earlier, the same as October.

The Fed is on track to hold rates steady at its meeting Tuesday and Wednesday, and the latest inflation data won’t change that path. The latest reading is probably a bit firmer than the Fed would like to see to be confident that inflation is moving back quickly to its 2% goal, but it is unlikely to alter the Fed’s near-term policy stance because inflation has improved markedly this year.

For example, core inflation was 2.9% at a six-month annualized rate in November, down from 5.1% for the six-month period before that.

Inflation is “certainly meaningfully coming down,” Treasury Secretary Janet Yellen said Tuesday at The Wall Street Journal CEO Council Summit in Washington. The former Fed chair brushed aside concerns some economists have raised that it would be a challenge to complete the so-called last mile in bringing inflation all the way down to the Fed’s 2% target, which is measured using a separate gauge from the Commerce Department.

Yellen saw no reason “why inflation shouldn’t gradually decline to levels that are consistent with the Fed’s mandate,” she said.

Fed wary of premature victory

Fed officials haven’t said they are done raising rates but are increasingly confident that they won’t need to raise more to defeat inflation. At the same time, Tuesday’s report is likely to reinforce the Fed’s concerns about cutting rates too soon.

Fed officials are wary of declaring a premature victory, given that inflation has appeared to be declining toward their target before, only to reaccelerate.

Investors are betting the central bank will begin cutting rates as soon as next spring. Fed Chair Jerome Powell earlier this month said it was too soon “to speculate on when policy might ease,” an attempt to keep those expectations in check.

Consumers’ long-term inflation expectations have fallen and Americans have become optimistic as price gains have slowed, according to a preliminary December reading of a University of Michigan survey.

Fed officials “didn’t want to crush the economy, they didn’t want to crush the labor market, they just wanted to let the air out,” said Kathy Bostjancic, chief economist at Nationwide Mutual Insurance. “So far that seems to be the case.”

Watching housing costs

If shelter costs cool over the next few months, overall inflation could slow below a 3% rate for the first time since the pandemic.

For now, housing continues to provide substantial upward pressure: The shelter index rose by 0.4% last month and 6.5% over the prior year, down from its recent peak in March but far higher than the Fed would like.

Annual increases in rents have cooled to pre-pandemic levels, according to Zillow. But the way housing inflation is measured it could take many months to show up in the consumer-price index.

While prices are rising more slowly for housing and other services, Americans are still feeling the pinch from high inflation over the past several years. The net share of consumers telling the University of Michigan it is a good time to buy a home is the lowest since 1982.

Kathryn and Tino DeSilva recently retired from their careers in sales and moved from their New York-area home to Bolivia, N.C. Looking to take advantage of the surge of home buyers in their area, they sold their Westchester County, N.Y., home as prices rose in 2021.

“Had we known they were going to continue to escalate, we would have waited another year,” Kathryn DeSilva said, estimating that their house would have gained another $100,000 in value.

Housing inflation has complicated the second part of their retirement plan: to adopt the snowbird lifestyle of living in North Carolina during the colder months and keep a small place in the Northeast to be close to their family.

“We can’t go back to New York,” she said. “It’s unaffordable, just unaffordable.”

Leading goods, lagging services

Smoother supply chains and more-restrained consumer spending have helped slow price increases for goods, especially long-lasting items. Retailers have cut many prices, including for electronics and home furnishings.

Prices for apparel, new cars, and televisions fell over the month. In an example of the slowdown in purchases of large appliances that consumers often buy on credit, prices for washing machines and dryers dropped sharply over the month and are down 12% from last year.

Many service categories continue to see price gains, including healthcare and auto repair. Admission prices for concerts and sporting events have increased sharply over the past year.

Lower costs throughout the production process could result in further discounting, said Scott Anderson, chief U.S. economist at BMO Capital Markets. “As energy prices continue to drop, that’s certainly going to help out on the goods-inflation side,” he said.