Fri Dec 20 21:10:00 UTC 2024: ## Inflation Cools Slightly, But Remains Above Fed’s Target
**NEW YORK** – Inflation showed a slight slowdown in November, according to the Commerce Department’s personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge. The PCE index rose 0.1% from October, resulting in a 2.4% annual inflation rate – below the Dow Jones estimate of 2.5% but still higher than the Fed’s 2% target. Core PCE, which excludes volatile food and energy prices, also increased 0.1% monthly and 2.8% annually, again slightly lower than projected.
While the headline inflation rate ticked up slightly from October, the report indicated a cooling in several key areas. Housing inflation, a persistent concern, rose a modest 0.2%. Goods prices showed little increase, while services prices rose 0.2%. This contrasts with a 12-month perspective showing goods prices down 0.4% and services up 3.8%.
The report also revealed softer-than-expected growth in personal income (0.3% increase) and spending (0.4% increase). The personal saving rate dipped to 4.4%.
The slightly lower-than-expected inflation figures were met with some relief in the markets, with stock futures and Treasury yields falling following the report’s release. E-Trade Morgan Stanley’s Chris Larkin described the data as suggesting “sticky inflation appeared to be a little less stuck.”
The news comes two days after the Federal Reserve lowered its benchmark interest rate by another quarter percentage point to a range of 4.25%-4.5%. However, the Fed also revised its projected rate cut path for 2025, now anticipating only two reductions compared to the four previously forecast. Fed Chair Jerome Powell attributed this to the uncertainty surrounding the inflation outlook, emphasizing a cautious approach.
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