United States inflation rose in November, according to the Federal Reserve’s preferred metric, moving away from the Fed’s 2% target.
The personal consumption expenditure (PCE) price index climbed 0.2% in November, with both headline and core inflation up 2.8% year-over-year. This was in line with Dow Jones forecasts.
The Fed’s long-term 2% inflation target is measured according to the PCE index, rather than the consumer price index (CPI). “The PCE index is constructed in a way that accounts for how Americans are spending their money at a given time and more quickly adapts to changes in spending patterns,” per the Board of Governors.
In October, the PCE index rose 2.7% year-over-year and 0.2% on a monthly basis. October’s data was released alongside November’s due to the 43-day government shutdown.
“Missing CPI data were derived from the September and November releases, meaning the month-on-month changes in the PCE offered little value,” wrote ANZ analysts.
“Given shutdown-related data issues and after consecutive 25bp cuts at the past three meetings, we expect the Fed will pause at its January meeting next week.”
Services PCE inflation was up 3.4% year-over-year in November, while goods inflation increased by 1.4%. Both were unchanged from September.
Personal income grew by 0.3% in November, the PCE report also said. This was below market estimates of 0.4%.
The U.S. CPI rose 2.7% year-over-year in December, meanwhile, and climbed 0.3% from the prior month.
