The Federal Reserve’s preferred gauges for monitoring inflation slowed in November, while real consumer spending remained flat, suggesting that central bank tightening on rates is helping to cool both inflationary pressures and demand. All this, with the prospect of a continuation of monetary tightening.
Specifically, the Personal Consumption Expenditure Price Index excluding food and energy (a more accurate measure of the inflation trajectory according to Fed Chair Jerome Powell), increased 0.2% in November compared to the previous month, in line with estimates, even if the October figure was revised from +0.2% to +0.3%.
On an annual basis, the indicator increased by 4.7%, less than 5% in October but more than the 4.6% expected.
The overall PCE price index, excluding food and energy components, increased by 0.1% quarter on quarter and by 5.5% compared to a year ago, the lowest since October 2021, but still well above the central bank’s 2% target.
Personal spending, adjusted for price changes, remained unchanged in November, posting the weakest performance since July and underperforming forecasts.
Numbers pointing to an appreciable easing of price pressures and suggesting that the US is past peak inflation, although much work remains to be done to bring it back towards the 2% target.