People shop at a Costco store in the Staten Island borough of New York City, USA, on January 16, 2026.
Brendan McDiarmid | Reuters
Inflation was in line with expectations but slightly off the Federal Reserve’s target for November, according to the central bank’s preferred indicators released on Thursday.
The Personal Consumption Expenditure Price Index, a Commerce Department measure used by the central bank as its main forecasting tool, showed both headline and core inflation at 2.8% for the month, in line with the Dow Jones Consensus.
Additionally, the department’s Bureau of Economic Analysis reported that interest rates in October were 2.7% on both a headline and core basis, the latter excluding volatile food and energy prices.
Compared to the previous month, sales increased by 0.2% in both months. In response to the government shutdown, which caused public agencies to stop collecting and reporting data, BEA released combined numbers for October and November.
In addition to the inflation statistics, the report showed personal income rose 0.1% in October and 0.3% in November, the latter 0.1 percentage point below expectations. In addition, personal consumption expenditure, an indicator of personal consumption, increased by 0.5% in both months, in line with November’s forecast.
The personal savings rate rose to 3.5% in November, down 0.2 percentage points from the previous month.
November price statistics reflect a 0.2% rise in both goods and services. Food prices were flat, while energy-related costs rose 1.9% after falling 0.7% in October.
The report was released on the same day the BEA announced that gross domestic product increased 4.4% in the third quarter, according to its second and final estimates. Additionally, the Labor Department reported that unemployment claims are hovering near the lowest level in two years.
Taken together, these data show that despite some softening in the labor market, consumer spending is ahead of inflation and the economy continues to expand.
“Consumers continue to drive the U.S. economy, and today’s data points to another strong increase in spending,” said James McCann, senior economist for investment strategies at Edward Jones. “This resilience comes despite last year’s slowing labor market and still-rising inflation, both of which weighed on real incomes.” “Today’s data should reassure the Fed that the economy remains strong despite the cooling labor market.”
Markets expect the Fed to cut interest rates for the third time in a row in 2025 and then leave them unchanged at next week’s policy meeting. Futures traders expect as many as two rate cuts this year as policymakers consider the impact of last year’s easing, as well as continued inflationary pressures and uncertain geopolitical conditions.
