The Federal Reserve’s Inflation Measure: November Rate at 2.4%
Prices remained relatively stable in November, showing only a slight increase of 0.1% from the previous month, as per the Commerce Department’s latest report released on Friday. However, when compared to the same time last year, prices were up 2.4%, slightly surpassing the Federal Reserve’s target of 2%.
Core Inflation and Excluded Categories
The personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, also saw a 0.1% rise in core PCE, excluding food and energy. This core index was up 2.8% from a year ago, reflecting a modest increase in long-term inflation trends. The annual core inflation rate remained steady at 2.8% compared to October’s figures, while the headline rate saw a slight uptick of 0.1 percentage point.
Goods and Services Prices
Goods prices experienced a marginal decrease of 0.4% over the year, while services prices rose by 3.8%. Both food and energy prices increased by 0.2%, with food prices up by 1.4% and energy prices down by 4%. Housing inflation, a key component of overall inflation, rose by 0.2% in November, indicating a potential cooling trend.
Income, Spending, and Market Reactions
The report also highlighted a slight dip in personal income, which increased by 0.3% following a significant jump of 0.7% in October. Personal expenditures rose by 0.4%, slightly below the forecast. The personal saving rate decreased to 4.4%, suggesting a shift in consumer behavior.
Following the release of the report, stock market futures and Treasury yields experienced a downturn. Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley, noted that the Fed’s preferred inflation gauge came in lower than expected, potentially easing concerns following the recent interest rate cut.
Chair Jerome Powell’s remarks about the uncertain path of inflation and the Fed’s decision to slow down the rate cuts in the coming years reflect a cautious approach to monetary policy. Powell likened this approach to navigating through fog or darkness, emphasizing the importance of proceeding with caution in uncertain times.
As the economy continues to evolve, understanding key indicators like inflation rates is crucial for policymakers and investors alike. The latest report sheds light on the current state of inflation, providing valuable insights into the broader economic landscape.
