People shop at a Costco store in the Staten Island borough of New York City, U.S., Jan. 16, 2026.
Brendan McDermid | Reuters
Inflation drifted slightly further from the Federal Reserve’s target in November though in line with expectations, according to the central bank’s preferred gauge released Thursday.
The personal consumption expenditures price index, a Commerce Department measure the central bank uses as its main forecasting tool, showed inflation at 2.8% for the month both for headline and core, in line with the Dow Jones consensus.
In addition, the department’s Bureau of Economic Analysis reported that the rate for October was 2.7% on both a headline and core basis, the latter excluding volatile food and energy prices.
The monthly figures showed a 0.2% increase for both months. The BEA released the October and November numbers together due to impacts from the government shutdown during which official agencies suspended data collection and reports.
In addition to the inflation figures, the report showed personal income up 0.1% in October and 0.3% in November, the latter 0.1 percentage point below the forecast. Also, personal consumption expenditures, a proxy for consumer spending, rose 0.5% in both months, matching the November forecast.
The personal savings rate rose in November to 3.5%, down 0.2 percentage point from the prior month.
Price figures for November reflected 0.2% increases in both goods and services. Food was flat while energy-related costs rose 1.9% and after falling 0.7% in October.
The report comes the same day that the BEA said gross domestic product rose 4.4% in the third quarter, according to the second and final estimate. In addition, the Labor Department reported that jobless claims are trending around their lowest level in two years.
Together, the data indicates an economy continuing to expand, with consumer spending ahead of inflation despite a somewhat softening labor market.
“The consumer continues to drive the U.S economy, with today’s data pointing to another strong gain in spending. This resilience comes in spite of last year’s slowdown in the labor market, and still elevated inflation, both of which have weighed on real incomes,” said James McCann, senior economist for investment strategy at Edward Jones. “Today’s data should reassure the Fed that the economy remains on a solid footing, despite a cooler labor market.”
Markets expect the Federal Reserve to stay on hold at its policy meeting next week following three consecutive interest rate cuts in 2025. Futures traders see at most two rate reductions this year as policymakers weigh the impact of last year’s easing, coupled with continued inflation pressures and an uncertain geopolitical landscape.
