Fed’s Favored Inflation Measure Continued to Cool in November

The PCE Price Index rose 0.1% in November and 5.5% year-over-year

A customer shops in a Kroger grocery store on July 15, 2022 in Houston, Texas.

Brandon Bell / Getty Images

The inflation gauge preferred by the Federal Reserve rose in November at the slowest pace in four months as prices for goods dropped.

The Commerce Department’s core Personal Consumption Expenditures (PCE) Price Index, which leaves out volatile food and energy prices, was up 0.2% from the month before, the smallest increase since July. The year-over-year gain was 4.7%, down from 5% in October. Both were in line with economists’ forecasts.

The overall PCE Price Index climbed 0.1%, down from 0.4% in October and slightly less than the 0.2% economists expected. The annual rate eased to 5.5% from 6.1% in October, and was the lowest 12-month rise since October 2021. 

Key Takeaways

  • The PCE Price Index rose 0.1% in November and 5.5% from a year earlier, the slowest annual price gain since October 2021
  • The core rate, which excludes more volatile food and energy costs, rose 4.7% from a year earlier, decelerating from a 5% gain in October
  • Moderating inflation could lead the Federal Reserve to ease the pace of interest rate hikes over the upcoming months

Energy Prices Sink

Prices for goods were down 0.4%, and they were higher by 0.4% for services. Energy costs sank 1.5% as gasoline prices tumbled. Food prices were up 0.3%. For the year, energy prices gained 13.6%, and food costs advanced 11.2%.

Personal spending increased 0.1%, less than estimates. Spending rose for services, led by housing. It fell for goods, with purchases of new motor vehicles the biggest contributor to the decline. 

Article Sources
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  1. U.S. Bureau of Economic Analysis. “Personal Income and Outlays, November 2022.”

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