Inflation rose slightly in November, according to a U.S. Bureau of Economic Analysis report released December 20, as a recent shift in the progress of price increases has drawn the focus on policymakers.
The Personal Consumption Expenditures (PCE) price index increased 0.1% in November. Excluding food and energy, the PCE price index increased 0.1%. Real disposable personal income (DPI) increased 0.2% in November and real PCE increased 0.3%; goods increased 0.7% and services increased 0.1%.
Personal income increased $71.1 billion (0.3% at a monthly rate) in November, according to estimates. DPI, personal income less personal current taxes, increased $61.1 billion (0.3%) and personal consumption expenditures (PCE) increased $81.3 billion (0.4%).
Year-over-year, PCE inflation rose by 2.4%. Prices for goods were actually down 0.4%, while services increased 3.8%. Core PCE inflation was up 2.8%.
The Federal Reserve is closely monitoring these rates of inflation as it determines further rate cuts in 2025.
“The slower pace of cuts for next year really reflects both the higher inflation readings we’ve had this year, and the expectation inflation will be higher,” Fed Chair Jerome Powell said at a news conference following their third rate cut this year.
The increase in current-dollar personal income in November primarily reflected an increase in compensation that was partly offset by decreases in personal income receipts on assets and personal current transfer receipts.
The $81.3 billion increase in current-dollar PCE in November reflected an increase of $48.3 billion in spending for goods and an increase of $33 billion in spending for services.
Within goods, the largest contributors to the increase were motor vehicles and parts (led by new motor vehicles) and recreational goods and vehicles (led by video, audio, photographic and information processing equipment and media).
Within services, the largest contributors to the increase were spending for financial services and insurance (led by financial service charges, fees and commissions); recreation services (led by membership clubs, sports centers, parks, theaters and museums as well as gambling); and healthcare (led by hospitals).
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