Despite an increase in producer prices, consumers didn't see much inflation in November. The Consumer Price Index (CPI) increased by just 0.1% last month, according to the Bureau of Labor Statistics. Why are prices still rising so slowly for consumers despite the latest Federal Reserve effort to increase inflation? There are a few potential explanations.

Before getting into that, let's take a quick look at the report highlights. First, here's a chart showing CPI over the past year:

You can see that inflation matched September's value as lowest in the five-month period. Inflation was very low despite producer prices rising by 0.8% in November

And interestingly, the slight increase in consumer prices wasn't driven by food and energy. Their prices didn't increase much either, as both rose by just 0.2%. That led "core CPI," the measure that excludes these two baskets of goods, to match the broader measure of CPI at 0.1%. Here's its historical chart:

You can see that core CPI has been extremely low really throughout the recession. Its 0.1% increase for November doesn't represent a significant change from its general trend, though it's slightly higher than it was over the prior three months when it was flat.

So why did prices rise so little for consumers when they rose so much for producers in November? One possible reason is that there's just a lag. It may take a some time for producers to push the price increases they face to consumers. If that's the case, then we should see higher prices for consumers in the next month or two.

Another possibility is that producers and/or retailers are mostly absorbing the price increases rather than passing them on to consumers. If they worry that some consumers won't be willing to pay higher prices for some items, then the sellers of those goods might feel forced to allow any inflation they face to eat into to their profit margin instead of their sales.

A final explanation could be that the Fed's policy simply hasn't managed to increase inflation much yet. If that's the case, then the increase in producer prices was just noise coincidental to a future trend.

This second theory above is arguably the worst possible scenario. If producers and retailers really are sacrificing their profits to keep sales up, then this implies that they'll have less money left over to hire and expand. If prices are too sticky, then this will simply prolong unemployment, despite relatively strong sales. This would essentially mean that the Fed effort to increase employment would backfire in the near- to medium-term.

Ultimately, it's still too early to judge how inflation will be affected by the Fed's recent policy shift. At this time, we can only conclude that it may be driving a small increase in producer prices, but doesn't yet appear to have affected consumer prices.