The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases fell month over month in November but still remained sticky as the central bank fights to bring inflation back down to its 2% target.
The data, released early Friday by Bureau of Economic Analysis (BEA), comes after the central bank slashed interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also signaled less easing to come in 2025, with inflation expected to remain elevated over the long term.
In November, the core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely tracked by the Fed, rose 0.1% from the prior month, a slowdown from October’s 0.3% monthly gain in prices and the slowest pace since May.
The monthly increase came in slightly lower compared to economist expectations of a 0.2% increase as services inflation for sectors like housing and utilities saw a deceleration compared to the prior month.
“November inflation was more benign than expected but the stickiness of some categories support the Fed’s hesitancy to materially 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 from higher portfolio values give consumers capacity to spend.”
Over the prior year, core prices rose 2.8%, matching the increase seen in October and also lower than Wall Street’s expectations of a 2.9% rise. On a yearly basis, overall PCE increased 2.4%, a pickup from the 2.3% seen in October. Economists polled by Bloomberg had anticipated a yearly increase of 2.5%.
The print follows sticky inflation readings from other November datasets.
Earlier this month, the core Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, saw prices in November climb 3.3% over last year for the fourth consecutive month.
Meanwhile, the core Producer Price Index (PPI), which tracks the price changes companies see, revealed prices increased by 3.4% annually in November. That’s up from a 3.1% jump in October and also ahead of economist expectations of a 3.2% increase.
In a press conference following Wednesday’s interest rate decision, Federal Reserve Chair Jerome Powell indicated that the last mile of the Fed’s fight to curb inflation has been more challenging than central bank leaders initially projected.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
