Fed's main gauge shows inflation at 2.8% in November, edging further away from target

• Monthly PCE inflation increased 0.2% in both October and November, with both headline and core measures at 2.8% year-over-year in November
• Personal income rose 0.1% in October and 0.3% in November (below the 0.4% forecast), while consumer spending increased 0.5% in both months
• The Commerce Department's Bureau of Economic Analysis released October and November data together after delays caused by the government shutdown

Summary: Fed's Inflation Gauge Rises to 2.8% in November

Key Data Points:

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, reached 2.8% year-over-year in November, moving further from the central bank's 2% target. Both headline and core PCE (excluding food and energy) registered 2.8%, matching Dow Jones consensus expectations. October's rate was revised to 2.7% for both measures.

Monthly inflation increased 0.2% in both October and November. The Bureau of Economic Analysis released both months' data simultaneously due to delays from a government shutdown that suspended data collection.

Additional Economic Indicators:

• Personal income rose 0.1% in October and 0.3% in November (slightly below the 0.4% forecast for November)
• Personal consumption expenditures increased 0.5% in both months, meeting November expectations

Market Implications:

The persistent elevation of inflation above the Fed's 2% target complicates the central bank's monetary policy decisions. With inflation edging higher rather than declining, this data could influence the Fed's stance on interest rate adjustments. The slight miss on November personal income growth and steady consumer spending suggest households continue spending despite income growth moderation.

Context:

The PCE price index is the Commerce Department measure that the Federal Reserve relies on as its primary forecasting tool for inflation, making this data particularly significant for policy decisions and market expectations regarding future rate movements.