The latest reading of the Federal Reserve’s favorite inflation gauge shows that price increases fell month over month in November but remained stubborn as the central bank pushed to return inflation to its 2% target.
The data, released Friday by Bureau of Economic Analysis (BEA)comes after the central bank cut rates by 25 basis points at its final policy meeting of the year on Wednesday. Officials also indicated that there would be less easing in 2025, with long-term inflation expected to remain high.
In November, the core Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely monitored by the Fed, rose 0.1% from the previous month, a slowdown from the monthly price increase of 0.3% in October and the slowest pace since May.
The monthly increase came in slightly lower than economists’ expectations of a 0.2% increase, as services inflation for sectors such as housing and utilities slowed from the previous month.
“Inflation in November was more benign than expected, but the persistence of some categories supports the Fed’s reluctance to cut rates substantially next year,” wrote Jeffrey Roach, chief economist at LPL Financial. “The economy continues to grow thanks to strong consumer demand, as income growth and the wealth effect of higher portfolio values give consumers the opportunity to spend.”
Over the previous year, core prices rose 2.8%, matching October’s increase and also lower than Wall Street expectations of a 2.9% increase. On a year-over-year basis, total PCE rose 2.4%, an improvement from October’s 2.3%. Economists polled by Bloomberg had expected an annual increase of 2.5%.
The print follows the sticky inflation readings from other November data sets.
Earlier this month, the core consumer price index (CPI), which excludes the more volatile costs of food and gas, saw prices rise 3.3% in November for the fourth month in a row compared to last year.
Meanwhile, the core producer price index (PPI), which tracks the price changes seen by businesses, showed prices rose 3.4% annually in November. That’s more than an increase of 3.1% in October and also higher than economists’ expectations of a 3.2% increase.
At a news conference after Wednesday’s interest rate decision, Federal Reserve Chairman Jerome Powell indicated that the latest phase of the Fed’s battle to curb inflation has proven to be more challenging than central bank leaders initially expected.
Read more: What the Fed’s interest rate cut means for bank accounts, CDs, loans and credit cards
