In November, the personal consumption expenditures (PCE) price index rose by 2.4% annually, slightly below the expected 2.5% but an increase from 2.3% in October.

Core inflation, excluding volatile food and energy prices, saw a modest rise of only 0.1%, down from previous increases of 0.3%.

An inflation gauge closely monitored by the Federal Reserve indicated a mere 0.1% increase in prices from October to November, suggesting a cooling of price pressures.

Despite recent federal funds rate cuts, Federal Reserve officials remain cautious about future reductions due to potential inflationary pressures from incoming economic policies under President Donald Trump.

Federal Reserve Chair Jerome Powell recently indicated that the Fed now expects only two interest rate cuts in 2025, down from a previous estimate of four, reflecting persistent inflation concerns.

While inflation has cooled significantly this year, its recent stability has led the Federal Reserve to adopt a careful approach regarding future interest rate cuts.

Market analysts, including Chris Zaccarelli, linked the lower-than-expected inflation data to a more optimistic market outlook, despite an anticipated sell-off.

The Federal Reserve closely monitors PCE inflation to guide its monetary policy, aiming for a long-term inflation target of 2%.

The increase in the annual inflation rate was anticipated due to comparisons with a year of lower inflation and temporary price hikes from hurricanes and holiday spending.

On December 18, 2024, the Federal Reserve reduced its benchmark interest rate by 25 basis points to a target range of 4.25%-4.5%, marking its third consecutive cut.

Incomes increased by 0.3% in November, outpacing price growth and potentially helping consumers manage higher costs over time.

Friday's report showed better-than-expected results, with personal income and spending data indicating a monthly gain of 0.3% and an anticipated growth for personal spending of 0.5%.