The latest reading from the Federal Reserve's preferred inflation gauge showed that price rises eased month-on-month in November but remained sticky as the central bank struggles to bring inflation back down to its target of 2%.
The data, released early Friday by the Bureau of Economic Analysis (BEA)comes after the central bank cut interest rates by 25 basis points at his last policy meeting of the year on Wednesday. Officers too a sign of less easing to come in 2025and inflation is expected to remain high over the long term.
In November, the core Personal Consumption Expenditure (PCE) index, which strips out food and energy costs and is closely tracked by the Fed, rose 0.1% from the previous month, slowing from a monthly increase of 0.3 % in October in prices and the slowest speed. since May.
The monthly increase came in slightly below economists' expectations of a 0.2% increase as services inflation for sectors such as housing and utilities saw a slowdown compared to the previous month.
“November inflation was more benign than expected but the stickiness of some categories supports the Fed's hesitation to significantly lower rates next year,” wrote Jeffrey Roach, chief economist at LPL Financial. “The economy continues to grow from strong consumer demand as income growth and the wealth effect of higher portfolio values give consumers the ability to spend.”
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% increase. On an annual basis, PCE increased by 2.4% overall, up from the 2.3% seen in October. Economists polled by Bloomberg had predicted an annual increase of 2.5%.
The print follows sticky inflation readings from other November data sets.
Earlier this month, the core Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, saw the prices in November climbing 3.3% over last year for the fourth consecutive month.
Meanwhile, the core Producer Price Index (PPI), which tracks the price changes companies see, prices revealed have increased 3.4% annually in November. That is up from a 3.1% jump in October and also ahead of economists' expectations of a 3.2% increase.
In a press conference following Wednesday's interest rate decision, Federal Reserve Chairman Jerome Powell noted that the last mile of the Fed's battle to curb inflation has been more challenging than central bank leaders originally anticipated.
Read more: What the Fed rate cut means for bank accounts, CDs, loans and credit cards
