Price pressures cooled last month, according to an inflation measure closely monitored by the Federal Reserve, the Associated Press reports. The gauge rose just 0.1% from October to November, signaling a slowdown after two months of sharper increases.
The government’s report, released this morning, also showed that “core” prices — excluding volatile food and energy costs — climbed a modest 0.1%, following two consecutive months of 0.3% gains.
The data comes just days after Federal Reserve Chair Jerome Powell announced a revised outlook for interest rate cuts in 2025. Fed officials now expect only two rate reductions that year, down from the four projected earlier. Powell attributed the adjustment to “stickier inflation,” which he described as a key factor in maintaining higher borrowing costs. Fewer rate cuts would likely keep mortgage rates and other consumer borrowing costs elevated.
On an annual basis, inflation in November was 2.4%, slightly up from 2.3% in October and still above the Fed’s 2% target. Core inflation held steady at 2.8% year over year.
The broader inflation measure, the personal consumption expenditures (PCE) price index, has declined sharply from its peak of 7.2% in June 2022 to 2.1% in September 2023. The Federal Reserve has used a steady stream of rate hikes to tame inflation, raising borrowing costs to cool economic activity.
Policymakers maintained their inflation forecast for the end of 2025 at 2.5%, while expecting core prices to reach the same level by the close of next year.
The Fed trimmed its benchmark interest rate by a quarter-point to approximately 4.3% on Wednesday, following a half-point cut in September and a quarter-point reduction in November.
