The US Department of Commerce reported on Thursday (January 22) that the Fed’s preferred inflation gauge – the core Personal Consumption Expenditures (PCE) Price Index, increased by 2.8% on an annual basis in November, in line with economists’ expectations. The Fed is expected to hold steady next week.
According to the report released by the Bureau of Economic Analysis of the US Department of Commerce, the PCE Price Index for personal consumption expenditures in November increased by 2.8% compared to the same period last year. The core PCE Price Index, which excludes the more volatile prices of food and energy, also saw a 2.8% year-on-year growth, matching the data expected by economists surveyed by Dow Jones & Company.
The report also revealed data for October, which were delayed due to the suspension of data collection and report release by official agencies during the government shutdown last fall.
The delayed October PCE Price Index data showed that the annualized growth rate for PCE and core PCE Price Index for that month was both 2.7%.
On a month-over-month basis, the overall PCE and core PCE Price Index for both October and November increased by 0.2% compared to the previous month.
The core PCE Price Index is a key indicator used by the Fed to measure inflation. While the growth rates of these indices increased in November, the pace of inflation growth has slowed compared to the previous year.
Market expectations are that the Fed will maintain interest rates at the upcoming policy meeting next week. Previously, the Fed had cut rates three times in 2025.
In addition to inflation data, the report from the Department of Commerce also provided information on personal income and expenditures.
Personal income saw a slight increase of 0.1% in October, followed by a larger increase of 0.3% in November, while personal consumption expenditures grew by 0.5% in both months. Overall, the growth rate of consumption expenditures exceeded that of personal income.
The report further indicated that the personal saving rate in November was 3.5%, a decrease of 0.2 percentage points from the previous month.
Prices of goods and services both increased by 0.2% in November. Food prices remained stable, while costs related to energy rose by 1.9% in November, following a 0.7% decrease in October.
Data on Gross Domestic Product (GDP) released by the Bureau of Economic Analysis on the same day showed that the revised annualized growth rate for the third quarter GDP was 4.4%, slightly higher than the initial report of 4.3%, marking the fastest growth rate in two years.
Additionally, a report from the Labor Department indicated that the number of people applying for unemployment benefits is nearing the lowest level in two years.
Overall, these data suggest that the US economy is continuing to expand, with consumer spending outpacing the rate at which inflation is rising, despite some softness in the labor market.