Annual inflation edges higher

Annual inflation edges higher

A key inflation gauge closely watched by the Federal Reserve showed consumer prices rising at an annual rate of 2.8% in November, according to delayed data released Thursday. That marked an increase from October’s 2.7% and moved inflation further above the Fed’s 2% target as policymakers prepare for their next interest-rate meeting, scheduled for Tuesday and Wednesday.

The Commerce Department’s latest personal consumption expenditures (PCE) report showed overall U.S. household spending rose by $108.7 billion in November from the previous month. Gains were led by healthcare, energy goods, and motor vehicles. Housing and utilities—long a major contributor to inflation—also remained elevated, with spending in the category increasing $8.2 billion.

Oxford Economics Chief U.S. Economist Michael Pearce said data from October and November point to “disposable incomes stagnating but spending rising at a strong pace regardless.” Supported by factors such as gains in stock market wealth, Pearce said consumer spending is on track to close the fourth quarter of 2025 with an annual increase of nearly 3%. That would be slightly below the third quarter’s 3.5% pace but well above Oxford’s earlier forecast of 2.1%.

On a month-over-month basis, government data showed personal income rose 0.3% in November, while disposable income increased 0.1%, roughly in line with a 0.2% rise in prices. The PCE index differs from the Labor Department’s more widely cited consumer price index, which uses different methodologies and showed annual inflation at 2.7% as of December.