WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge rose in November, the latest sign that prices remain elevated even as consumers continued to spend, according to figures released by the Commerce Department.
Consumer prices rose 2.8% in November from a year earlier, up from a 2.7% annual pace in October. Excluding the volatile food and energy categories, core prices also increased 2.8% from a year ago, slightly higher than the 2.7% pace recorded in October.
The report also showed consumer spending climbed 0.5% in November from the previous month. The monthly gain suggested continued consumer demand even as other parts of the labor market appeared to soften.
On a monthly basis, the figures were milder than the year-over-year trend. The report said overall inflation and core inflation both moved up 0.2% in November from October, a pace that the article said would over time move inflation closer to the Federal Reserve’s 2% target.
The Commerce Department data came Thursday after a six-week government shutdown last fall delayed the release. The article also noted that the Thursday inflation update arrives alongside separate reports indicating the economy’s momentum into the final quarter of 2025.
The solid consumer spending figures follow a separate report Thursday that showed the economy expanded at a healthy 4.4% annual rate in the July-September quarter, the fastest growth in two years. Together, the reports pointed to continued solid growth heading into the final quarter of 2025.
While inflation has declined substantially from earlier highs, the article said it remains elevated. It cited that inflation was down sharply from a four-decade peak in June 2022, even as the broader environment still left policymakers watching closely.
The article said hiring has slowed to a crawl, leaving job-seekers frustrated even though the unemployment rate has stayed low. In that context, it said the new data could reduce the odds that the Fed would cut its key interest rate at its next week meeting.
James McCann, an economist at Edward Jones, said the report should help reassure the Fed. “Today’s data should reassure the Fed that the economy remains on a solid footing, despite a cooler labor market,” he said.
McCann added that he saw little urgency to cut rates next week, arguing the central bank could stay on hold longer if growth stays robust into 2026 and inflation continues to run above target. “Indeed, there looks to be little urgency to cut rates at next week’s meeting, and the central bank could stay on hold for longer should growth remain robust into 2026 and inflation continue to run at above target rates,” McCann said.
At the same time, the article emphasized the Fed’s usual approach: the kind of “stay on hold” decision typically used when officials are worried about signs of a stumbling economy.