Consumer prices rose in November, with grocery prices showing their biggest increase in nearly two years, as inflation continues to pressure household budgets. 

The Consumer Price Index rose 2.7% over the year, an uptick from 2.6% in October, the Bureau of Labor Statistics said Wednesday. Grocery prices rose 0.5% over the month, the biggest monthly increase since January 2023.

The overall inflation number last month was in line with the expectation of forecasters, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.

While inflation has cooled considerably since peaking at a 9.1% annual rate in June 2022, it remains above the Federal Reserve's goal of 2%. November marked the second month in a row in which the CPI rose on a year-over-year basis.

Nonetheless, the Fed is widely expected to cut the benchmark fed funds rate at its last policy meeting of the year next Wednesday. Traders are now pricing in a 96% chance of a quarter-point rate cut next week, compared with the 86% likelihood that was being priced in before the inflation report was released, according to the CME Group's FedWatch Tool.

"Core" inflation, which excludes the volatile prices for food and energy, rose 3.3% over the year, the same as in October and also in line with expectations.

Economists and policymakers pay closer attention to core inflation measures because food and energy prices fluctuate for reasons that have nothing to do with broader inflation trends. A 2% jump in used car prices between October and November was a major driver of core inflation.