FX.co ★ U.S. Consumer Prices Inch Higher In November, Annual Growth Accelerates Slightly Less Than Expected

In November, the U.S. witnessed a modest rise in consumer prices, as detailed in a recent report by the Commerce Department. According to this report, the personal consumption expenditures (PCE) price index saw a minimal increase of 0.1% in November, following a 0.2% rise in October. This was slightly below economists' expectations, who had predicted another 0.2% increase.

Breaking it down, the rise came from goods prices barely moving upward by less than 0.1%, while service prices saw a 0.2% rise. The yearly growth rate of the PCE price index quickened slightly to 2.4% in November from 2.3% in October, whereas economists had anticipated a rise to 2.5%.

The year-on-year upswing in consumer prices was propelled by a 3.8% hike in service prices, which more than compensated for a 0.4% slump in goods prices. Excluding the often-volatile food and energy sectors, the core PCE price index nudged up by 0.1% in November, following a 0.3% gain in October. Economists had forecasted a 0.2% rise in core prices.

The annual growth rate for the core PCE price index remained stable at 2.8% in November, unchanged from October, despite expectations for an escalation to 2.9%. Jeffrey Roach, Chief Economist for LPL Financial, noted, "November's inflation figures were less intense than projected, but the persistence in certain categories may justify the Federal Reserve's cautious approach towards significantly lowering rates next year."

These inflation metrics, favored by the Federal Reserve, were part of a broader report on personal income and spending. This report also indicated a 0.3% increase in personal income for November, following a revised 0.7% rise in October. Initially, economists had anticipated a 0.4% increase relative to the previously reported 0.6% rise for October.

Adjusted for taxes, disposable personal income mirrored the 0.3% increase seen in personal income, following a 0.7% increment in October. Concurrently, personal spending rose by 0.4% in November, an upturn from the revised 0.3% growth in October, though expectations were set for a 0.5% increase.

When adjusted for price changes, personal spending still managed a 0.3% rise in November, up from a 0.1% increment in October. As spending outpaced income slightly, the personal saving rate as a percentage of disposable personal income decreased marginally from 4.5% in October to 4.4% in November.