The Fed’s preferred measure of inflation shows price increases falling in November

The latest reading of the Fed’s preferred gauge of inflation showed price increases falling month-on-month in November, but remaining steady as the central bank struggles to bring inflation back to its 2% target.

data, Released early Friday by the Bureau of Economic Analysis (BEA)This comes after the central bank lowered interest rates By 25 basis points At his final policy meeting of the year on Wednesday. Officials too He indicated less easing in 2025 Inflation is expected to remain high in the long term.

In November, the core personal consumption expenditures index, which excludes food and energy costs and is closely tracked by the Fed, rose 0.1% from the previous month, a slowdown from a 0.3% monthly gain in October. The monthly increase was slightly lower compared to economists’ expectations for a 0.2% increase.

Over the previous year, core prices rose 2.8%, matching the increase seen in October and also below Wall Street’s expectations of a 2.9% rise. On an annual basis, total personal consumption expenditures rose 2.4%, up from 2.3% recorded in October. Economists surveyed by Bloomberg had expected an annual increase of 2.5%.

This edition follows flat inflation readings from other November data sets.

Earlier this month, the core CPI, which excludes the more volatile costs of food and gas, was released. Prices saw in November By 3.3% compared to last year for the fourth month in a row.

Meanwhile, the core Producer Price Index (PPI), which tracks price changes seen by companies, Price increases revealed By 3.4% annually in November. That’s higher than a 3.1% jump in October and also ahead of economists’ expectations of a 3.2% increase.

In a news conference following Wednesday’s interest rate decision, Federal Reserve Chairman Jerome Powell indicated that the last mile of the Fed’s battle to curb inflation was more difficult than central bank leaders initially expected.

“We had year-end inflation expectations, and they’re kind of collapsing as we get toward the end of the year,” Powell said. “I can tell you that may be the single biggest factor – inflation has once again underperformed compared to expectations.”

So far this year, inflation has remained moderate But it stubbornly remains above the Fed target at 2% On an annual basis, under pressure from higher-than-expected readings of monthly “core” price increases in recent months.

According to updated economic forecasts from the Fed’s Summary of Economic Outlook (SEP), the central bank expects core inflation to peak at 2.5% next year, higher than the September forecast of 2.2%, before cooling to 2.2% in 2026 and 2.0% in 2027.

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