PCE Inflation, the Fed’s Preferred Measure, Sped Up in November

Federal Reserve officials are closely watching how inflation shapes up as they contemplate when and how much to cut interest rates in 2025, and the latest inflation data offers reasons for both wariness and hope.

The central bank’s preferred inflation measure, released on Friday, climbed 2.4 percent in November from a year earlier, faster than its 2.3 percent rate in October and notably quicker than the central bank’s 2 percent target.

And after stripping out food and fuel costs, both of which bounce around from month to month, “core” inflation was 2.8 percent, in line with its previous reading.

The stickiness in yearly inflation served as a reminder that bringing price increases back to a normal pace remained a bumpy and incomplete project.

But the details of the report were more encouraging. On a monthly basis, both overall and core inflation climbed 0.1 percent — slightly less than what economists had expected, and slower than in October. That suggested that progress on inflation had not stalled quite as much as expected.

In all, the fresh inflation figures probably reinforce both the Fed’s cautious stance and a widespread belief among its policymakers that inflation will eventually slow further.