PCE inflation November 2024:

Prices barely budged in November but still remained above the Federal Reserve’s target when looking back a year, according to a Commerce Department measure released Friday.

The personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, showed an increase of just 0.1% since October. The measure indicated an annual inflation rate of 2.4%, still above the Federal Reserve’s 2% target, but below the Dow Jones estimate of 2.5%. The monthly reading was also 0.1 percentage point below the forecast.

Excluding food and energy, core PCE also rose 0.1% month-on-month and was 2.8% higher than a year ago, and both readings were also 0.1 percentage points lower than expected. Federal Reserve officials generally consider the base reading to be a better measure of long-term inflation trends since it excludes the volatile gasoline and grocery category.

The annual reading of core inflation was the same as in October, while the headline rate rose 0.1 percentage points.

The readings reflected a small increase in prices for goods and a 0.2% increase in prices for services. Food and energy prices also posted gains of 0.2%. In 12 months, prices of goods have fallen by 0.4%, but services have increased by 3.8%. Food prices rose 1.4% while energy fell 4%.

Housing inflation, one of the most difficult components of inflation during its economic cycle, showed signs of cooling in November, increasing only 0.2%.

The income and expense figures in the release were also a bit light compared to expectations.

Personal income rose 0.3% after rising 0.7% in October, missing the estimate of 0.4%. Regarding spending, personal expenses increased by 0.4%, one tenth below what was expected.

The personal savings rate fell to 4.4%.

Stock market futures remained in negative territory after the report, while Treasury yields also fell.

“Persistent inflation seemed to be a little less stagnant this morning,” said Chris Larkin, managing director of trading and investments at E-Trade Morgan Stanley. “The Fed’s preferred inflation gauge came in lower than expected, which may ease some of the pain of the market’s disappointment with the Fed’s interest rate announcement on Wednesday.”

The report comes just two days after the Federal Reserve cut its benchmark interest rate another quarter of a percentage point to a target range of 4.25%-4.5%, the lowest in two years. However, Chairman Jerome Powell and his colleagues reduced their expected trajectory for 2025, now targeting just two reductions compared to the four indicated in September.

Although Powell said Wednesday that inflation has moved “much closer” to the Fed’s target, he said changes in the projected path for rate cuts reflect “the expectation that inflation will be higher” in the next anus.

“It’s kind of common sense to think that when the road is uncertain you go a little slower,” Powell said. “It’s not much different than driving on a foggy night or entering a dark room full of furniture. You just slow down.”