Inflation is coming down, but not without some twists and turns.

Overall inflation eased again in November, as a drop in gasoline prices offset another increase in rent.

But an underlying measure that the Federal Reserve watches closely stayed elevated, possibly buttressing the case for the central bank to hold off on interest rate cuts in the short term.

Consumer prices broadly rose 3.1% from a year earlier, down from 3.2% in October, according to the Labor Department’s consumer price index. That pulled inflation closer to the more than two-year low it reached in June, before a jump in gasoline prices. On a monthly basis, prices rose a modest 0.1%.

That’s the good news.

What is core inflation right now?

But core prices, which exclude volatile food and energy items, and which the Fed follows more closely, rose 0.3% after a 0.2% bump the previous month. The advance kept the annual increase at 4%, matching the lowest mark since September 2021.

Is inflation really getting better?

Inflation has slowed substantially since reaching a 40-year high of 9.1% in June 2022. The pullback was particularly encouraging in October, when both overall and core inflation moderated notably. That helped push down 10-year Treasury yields and fueled speculation that the Fed will lower interest rates more aggressively than anticipated in 2024.

But the monthly increase in core prices will likely hover at sturdy 0.3% for the next three months, Goldman Sachs says. That could make the Fed wary of reducing rates too early or too quickly, economists say.

Prices for goods such as used cars and furniture have been sliding as pandemic-related supply-chain snarls have resolved. But the cost of services such as rent, medical care, car repairs and auto insurance have continued to edge higher, at least in part because of swiftly rising employee wages tied to COVID-induced labor shortages.

Nancy Torborg, of Raleigh, North Carolina, says she and her husband haven’t felt the drop-off in inflation. Their weekly grocery bill has doubled to about $200 the past couple of years. Restaurant tabs also have shot higher, prompting the couple to dine out once every three months instead of monthly.

And they no longer attend movies that run them $30 to $40, opting instead to stream films at home.

Because of inflation, “I can’t afford to retire,” says Torborg, 67, a public school librarian. “I’ll be working until I’m physically unable to.”

When can we expect the Fed to lower interest rates?

The Fed is currently convening for the final time this year and is expected to announce on Wednesday that it will hold its key rate steady for a third straight meeting. The lengthy pause follows the central bank's most aggressive rate-hike campaign in decades as it fought to curb inflation. The Fed is also expected to update its forecast for the economy and interest rates. Markets expect four or five quarter-point rate cuts next year, bringing rates to a range as low as 4% to 4.25%. Economists, however, reckon the Fed will predict just two cuts.

The Fed's reluctance to cut rates too soon will likely be bolstered by November's rise in core inflation, economists say.

"The Fed may now be marginally more likely tomorrow to try and push back against market expectations for near-term interest rate cuts," economist Andrew Hunter of Capital Economics wrote in a research note.

Why oil and gas prices are falling

Gasoline prices dropped 6% in November after falling 5% the previous month, and they’re down 8.9% from a year earlier. Pump prices are well below their $5 peak in summer 2022 and have fallen recently on flagging global demand and doubts that OPEC will follow through with planned production cuts.

Regular unleaded prices averaged $3.15 nationally on Monday, down from $3.37 a month ago, according to AAA.

What food got cheaper?

Grocery prices rose just 0.1%, lowering the annual increase to 1.7% and providing consumers some relief from double-digit yearly price gains in 2022. The cost of commodities such as wheat and corn generally have come down this year amid increased production and softer global demand.

Last month, the price of several proteins fell. Uncooked ground beef was down 1.5%; bacon, 2.1%; chicken, 0.4%; and fresh fish, 0.3%.

Other items got a bit more expensive. Egg prices rose 2.2%, though they’re down 22.3% annually. Breakfast cereal was up 0.8% and rice, 0.8%. That means a 5-pound bag of rice costing $8 could have risen in price by about 6 cents.

Why is it so expensive to rent?

Rent continued to serve as a big inflation driver, jumping 0.5% for the fourth straight month. That’s still down from a flurry of stronger gains and it nudged down the yearly rise to 6.9%. Economists expect rent increases to pull back, based on new leases, but that shift has been slow to filter through to existing leases.

The price of other services kept drifting higher, with car insurance up 1% and 19.2% from a year ago. Auto repairs costs rose 0.3% and medical care, 0.6%.

Hotel rates, though, dropped 0.9% following a 2.5% decline the previous month and airfares were off 0.4%.

Goods prices continued to generally head lower. Furniture and bedding slipped 1.1%, theoretically adding about $24 to the cost of a $2,200 sofa. Apparel, 0.3% and new vehicles 0.1%. But used car prices rebounded 1.6% after generally declining following a pandemic-induced leap.

How did the stock market react to today's inflation news?

Stock markets edged upward in late morning trade on Tuesday following the inflation report. As of 11:20 a.m. ET, the S&P 500 rose 0.11%, while the Dow Jones Industrial Average gained 0.27%

For more on the impact of today’s inflation news, keep reading:

What is the Federal Reserve’s target rate for inflation?

The Federal Reserve has set a 2% target for the annual inflation rate.

With its campaign of aggressive interest rate hikes, the Fed has made significant progress toward bringing down inflation to its 2% goal. But the panel is prepared to raise rates further if appropriate, Fed Chair Jerome Powell said in a speech earlier this month.

Powell did not say when the Fed might start cutting rates.

“Having come so far so quickly, the (Fed’s policymaking committee) is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced,” Powell said in a speech at Spelman College in Atlanta.

How will inflation affect holiday spending?

Despite lingering inflation, the National Retail Federation forecasts record holiday spending. But the year-to-year increase in consumer spending may be smaller than in recent years.

The trade group projects consumers will spend between $957 billion and $967 billion in November and December, an increase of 3% to 4% over holiday spending in 2022.

While either total would represent a record high, the Federation notes that holiday spending rose by higher rates in each of the last three years. Holiday spending rose by 9.1% in 2020 and 12.7% in 2021, buoyed by trillions of dollars in stimulus funds.

How has inflation affected credit card debt?

Lingering inflation is a major factor in America’s crushing credit card burden. The nation’s collective card balance stands at a record $1.08 trillion, as of the end of September.

The average holiday shopper expects to spend $1,652 this year, Deloitte reports, a bigger splurge than in any of the last three years.

Much of the tab will go on cards. In an October survey of 1,036 consumers by CardRates.com, 38% of respondents said they plan to carry holiday credit card debt into the new year.

This article originally appeared on USA TODAY: Inflation eased again in November as gas prices fell: CPI report.