Dec. 22 (UPI) — Consumer core inflation watched by the Federal Reserve was up slightly in November, drawing closer to the central bank’s desired level.
The personal consumption index, or PCE, excluding food and energy prices, was up by 0.1% for the month, up 3.2% in November from a year ago, according to a Friday report from the Bureau of Economic Analysis.
With volatile food and energy prices are factored in, PCE inflation was down slightly by 0.1%.
“Prices for goods decreased 0.7% and prices for services increased 0.2 % Food prices decreased 0.1% and energy prices decreased 2.7 %,” the BEA said in a statement. “Excluding food and energy, the PCE price index increased 0.1%.”
With food and energy prices included the PCE increased 2.6%. from last November.
“Within services, the largest contributors to the increase were housing and utilities (led by housing) and food services and accommodations (led by purchased meals and beverages),” the BEA statement said. “Within goods, the leading contributor to the decrease was gasoline and other energy goods (led by motor vehicle fuels, lubricants, and fluids).”
The Dow Jones expectation, based on surveys of economists, was 0.1% for the month and 3.3% from a year ago.
The numbers are closer to the Fed ideal inflation rate target of 2%, PCE increased 1.9% on a six-month basis, showing that if trends persist the central bank’s goal will be acheived.
“Adding in the further sharp slowdown in rent inflation still in the pipeline, it’s hard to see any credible reason why the annual inflation rate won’t also return to the 2% target over the coming months,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
The PCE was flat in October as a decline in goods prices was offset by a rise in services costs.
