U.S. Inflation Edges Up to 2.8% in November Amid Steady Consumer Spending

In November, the U.S. personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, increased to 2.8% from 2.7% in October, according to the Commerce Department. Core PCE, which excludes volatile food and energy prices, also rose to 2.8% year-over-year.

Consumer spending showed resilience, climbing 0.5% in November from the previous month, signaling robust economic activity as the year concluded.

The Federal Reserve aims for a 2% inflation target. Despite the current rate exceeding this goal, inflation has significantly cooled from its peak in June 2022. The central bank is expected to maintain its current policy stance in the upcoming meeting, considering the steady economic growth and persistent inflation pressures.

Additionally, the Bureau of Economic Analysis reported a 4.4% growth in gross domestic product for the third quarter, the highest in two years. The Labor Department noted that jobless claims are trending around their lowest level in two years, indicating a strong labor market.

James McCann, senior economist for investment strategy at Edward Jones, commented on the data:

"The consumer continues to drive the U.S. economy, with today's data pointing to another strong gain in spending. This resilience comes in spite of last year's slowdown in the labor market, and still elevated inflation, both of which have weighed on real incomes."

Market expectations suggest the Federal Reserve will hold interest rates steady at its policy meeting next week, following three consecutive cuts in 2025. Futures traders anticipate at most two rate reductions this year as policymakers assess the impact of previous easing measures alongside ongoing inflation pressures and an uncertain geopolitical landscape.