The Federal Reserve's preferred measure of inflation came in lower than expected in November, though it remains above the central bank's target as efforts to curb inflation continue.
The Commerce Department reported Friday that the personal consumption expenditures (PCE) price index increased by 0.1% in November and 2.4% year-over-year, both below FactSet economists' forecasts.
The core PCE index, which excludes volatile food and energy costs, also rose 0.1% for the month and 2.8% from a year earlier, undershooting expectations.
U.S. stock markets showed mixed reactions following the release of the data, reflecting the week's volatility leading up to the shortened Christmas trading period.
Despite the lower-than-expected readings, the headline PCE figure edged up from 2.3% in October and 2.1% in September, signaling that inflationary pressures remain persistent.
The Federal Reserve has emphasized the importance of the headline PCE figure in its goal of reducing inflation to 2%, although policymakers consider the core PCE measure a more reliable indicator of inflation trends.
Federal Reserve Chair Jerome Powell
Federal Reserve Chair Jerome Powell speaks during a press conference following a meeting of the Federal Open Market Committee at the Federal Reserve headquarters in Washington, D.C.
This week, the Federal Reserve cut interest rates by 25 basis points, with Chair Jerome Powell emphasizing the role of data in shaping future policy decisions.
“We know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment,” Powell said during his post-meeting press conference. “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will assess incoming data, the evolving outlook, and the balance of risks. We’re not on any pre-set course in our summary of economic projections.”
Personal consumption, or spending, rose 0.4% in November, in line with the previous month but below estimates. Personal incomes increased by 0.4%, less than October's 0.6% rise.
