On Friday, the Commerce Department reported that the Federal Reserve’s preferred inflation gauge experienced a slowdown in November, marking the first sign of easing price pressures in several months.
Inflation continues to pose a challenge for policymakers, remaining at levels that are concerning. However, recent data suggests there may be a glimmer of hope, indicating that while progress in reducing inflation may be uneven, it is not entirely at a standstill.
The Personal Consumption Expenditures price index experienced a modest rise of 0.1% last month, marking the smallest increase since August.
The key metric monitored by economists, excluding energy and food prices, experienced a comparable increase — marking the slowest rise in prices since May.
The bond market showed clear signs of relief following the report. Yields on the 10-year bond have decreased to 4.5%, retreating from a near peak of 4.6% observed on Thursday. This decline follows a surge influenced by the Federal Reserve’s decision to scale back on rate cuts.
Yes, however, there was a decline in inflation progress when analyzed against the same timeframe from the previous year.
In comparison to the same month last year, the PCE price index saw an increase of 2.4%, marking a slight rise from October’s figures. Core PCE remains steady at 2.8%.
The latest PCE data has been released, accompanied by new information regarding disposable income and consumer spending trends.
In November, disposable income experienced a rise of 0.3%, a decrease from the 0.7% increase recorded in the previous month. When adjusted for inflation, income experienced a rise of 0.2%, a decrease from the 0.5% increase recorded in October.
Personal consumption expenditures, which serve as an indicator of consumer spending, showed a notable increase last month, climbing by 0.4%, a slight uptick from October’s figures. The increase in real terms was recorded at 0.3%, a rise from the previous figure of 0.1%.
Recommended viewing options: The Federal Reserve has implemented its third interest rate cut this week, yet it has indicated that fewer reductions are anticipated in 2025 due to persistent inflationary pressures. Last week, the Consumer Price Index, a distinct gauge of inflation, reported a significant increase for November.
Cleveland Fed president Beth Hammack, who opposed the decision to cut rates and advocated for maintaining them, highlighted potential risks of rising inflation in the upcoming months on Friday.
“In a blog post detailing her dissent, Hammack stated that the economy’s momentum and recent high inflation readings prompted her to adjust her inflation forecast for the upcoming year.”
