The Fed’s inflation gauge ticked up less than expected last month

CNN
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The Federal Reserve’s preferred gauge of inflation moved slightly higher in November — but not as much as economists had expected, an indication that price increases are not accelerating in a worrisome way.

Still, concerns about the cost of living are growing as 2025 approaches and uncertainty increases about potential inflationary global events and domestic policies.

The price index for personal consumption expenditures rose 2.4% in November from a year earlier, warming from October’s 2.3% rise, according to new Commerce Department data released Friday.

On a monthly basis, prices rose just 0.1%, a slower pace of growth than the 0.2% increase in October. Economists had expected a monthly increase of 0.2%, according to FactSet.

An increase in annual inflation was fully expected due to comparisons with a period a year ago when inflation cooled quickly, as well as some hurricane and holiday-driven price increases that were considered ephemeral.

However, Friday’s reading came in better than the 0.2% monthly increase and 2.5% annual increase that economists were expecting, according to FactSet consensus estimates.

Plus, the closely watched “core” measure of inflation, which excludes the more volatile food and energy categories, rose at the slowest monthly pace since May, leaving the annual rate steady at 2.8%, data showed from the Ministry of Commerce.

Inflation has cooled significantly this year but has moved sideways in recent months, prompting the Fed to take a more cautious approach to rate cuts in the coming year. Fed Chairman Jerome Powell said on Wednesday – as the central bank cut interest rates by a quarter of a point – that while there has been “significant progress” on inflation, uncertainty is also growing.

Although the rate indicates that inflation remains at hand, there is increased concern about how it might change next year. Most economists say President-elect Donald Trump’s policy proposals around tariffs, immigration and taxes could be inflationary.

However, San Francisco Fed President Mary Daly, who voted for a quarter-point cut, said she was not considering that much at this week’s monetary policy meeting.

“It’s always about data for me. We don’t know what the incoming administration will do,” she said in a Bloomberg TV interview on Friday.

On the inflation front, she said data has “come in a little slower,” but she wouldn’t categorize it as “sticky or stalled.”

Cleveland Fed President Beth Hammack, who dissented at the Fed’s policy meeting earlier this week and favored a pause rather than a quarter-point cut that the other 11 voting Fed officials chose, said she needs to see “further evidence that inflation is resuming its path to our 2% target.”

Until then, “I think monetary policy will have to remain modestly restrictive for some time,” she said in a statement released Friday morning.

“The momentum of the economy and the recent elevated inflation readings caused me to revise my inflation forecast for next year,” Hammack added. Ultimately, she said her decision was “a close call,” echoing Powell, who also said Wednesday’s rate cut decision was “a closer call” compared to recent meetings.

This story is in development and will be updated.