Inflation Re-Accelerates Despite Plunging Gasoline Prices as “Core Services” PCE Price Index Hits Seven-Month High
by Wolf Richter
Wolf Street
Core services inflation is the biggie, and it’s going the wrong way. The Fed is already talking down the pace of rate cuts.
Inflation has been in services and is still in services, it has become sticky in services, and recently it has been re-accelerating in services. Services dominate consumer spending. And durable goods prices rose for the second month in a row, after big drops. But gasoline prices continued to plunge, and food prices ticked up just a little, according to the PCE price index by the Bureau of Economic Analysis today. This is the data the Fed prioritizes as yardstick for its 2% inflation target.
Three of the four major metrics accelerated in October even on a year-over-year basis: the overall PCE price index to +2.3% (blue), the “Core” PCE price index to +2.8%, (red), and the “Core Services” PCE price index to +3.9% (gold), while the durable goods PCE Price index started rising from the ashes and became less negative (green).
‘Black Friday’ Deals Target Inflation-Weary U.S. Consumers
by John Biers
Yahoo! Finance
Inflation has stabilized after dramatic price spikes during the Covid pandemic years, but consumers are still feeling the pinch — meaning bargain-hunting strategies such as grabbing early giveaways and waiting for last-minute steals are in vogue.
Compared with other years, holiday shoppers in 2024 are “even more preoccupied and very focused around value and discounts,” said Vivek Pandya, leading insights analyst at Adobe Digital Insights.
Tech Stocks Spark Europe Market Rebound; Inflation Data Looms
by Reuters
Kitco
Nov 28 (Reuters) – Tech stocks spearheaded a rebound in European shares on Thursday, after a two-day slump fuelled by worries over potential U.S. tariffs and France’s economic and political challenges, with investors now closely watching inflation reports for clues on the future trajectory of interest rate cuts.
The pan-European STOXX 600 (.STOXX), index was up 0.4% to 507.23 points. Trading volumes were expected to be light with the U.S. market shut for Thanksgiving holiday.
The tech sector (.SX8P), climbed nearly 1%, logging its best day in one week, as chip stocks gained after Bloomberg reported the U.S. administration’s China chip curbs could be less severe than expected.
Russian Central Bank Takes Desperate Stand to Halt Collapsing Ruble and Fierce Inflation
by Christiaan Hetzner
MSN
In a bid to stave off red-hot inflation, Russia’s central bank halted all foreign currency purchases for the remainder of the year, while actively selling Chinese yuan, in hopes of propping up the ruble. The ruble—currently worth a fraction of a penny—hit lows on Wednesday not seen since the start of the Ukraine war.
The aim is to put a floor underneath the ruble and clamp down on further price pressure leaking into the country through the rising cost of imported goods. The Russian economy is also suffering from a lack of foreign investment caused by Western government sanctions that ban companies from doing business with Russia. With most Russian financial institutions now cut off from trading in dollars, this starves the country of a steady supply of U.S. currency reserves.
Breitbart Business Digest: Inflation is Making a Fool of the Fed
by John Carney
Breitbart.com
Inflation Is Rising Again
The acceleration of inflation since the Federal Reserve cut interest rates in September suggests that the move was a mistake.
The personal consumption expenditure (PCE) index rose 2.3 percent over the 12 months through October, the Bureau of Economic Analysis said on Wednesday, up from 2.1 percent through September. Core PCE prices, a measure that excludes food and energy, rose 2.8 percent, the biggest year-over-year increase since April.
The month-to-month inflation figures do not look alarming until they are annualized. The 0.2 percent monthly gain in headline PCE inflation annualizes to 2.9 percent, meaning that would be the rate of inflation if it continued to run at this pace for a year. That’s a big increase from the 2.1 percent one-month annualized pace recorded in September and a long way from the Fed’s two percent target.
Gold Trims Gains On U.S. Inflation Data, Finds Support in Softer Dollar
from Kitco
Nov 27 (Reuters) – Gold rose on Wednesday, rebounding from an over one-week low hit in the previous session, on a weaker dollar, but trimmed earlier gains after data showed stalled inflation progress, hinting that the U.S. Federal Reserve might be cautious on further rate cuts.
Spot gold was up 0.3% at $2,638.90 per ounce, as of 01:41 p.m. ET (1841 GMT). U.S. gold futures settled 0.7% higher at $2,639.90.
U.S. markets to be closed on Thursday in observance of the Thanksgiving holiday.
U.S. consumer spending increased solidly in October, but progress lowering inflation appears to have stalled in the past months.
Fed’s Favored Inflation Metric Ticked Up to Six-Month High In October
Core inflation climbed to a multi-month high as expected in October, according to data released Tuesday morning, as questions swirl about the sticky price increases for American consumer with the potential inflationary effects of the tariffs backed by President-elect Donald Trump ahead.
by Derek Saul
Forbes
[…] Surprising Fact
Though the core PCE metric is about half of its 2022 peak of 5.6%, it’s still higher than it was for all of 1994 to 2020, evidence of the yearslong price increases coming out of the depths of the COVID-19 pandemic.
Key Background
The PCE index tracks how much Americans actually spend on goods and services in a given month.
Fed’s Preferred Inflation Gauge Rises to 2.3% Annually, Meeting Expectations
The personal consumption expenditures price index increased 0.2% on the month and showed a 12-month inflation rate of 2.3%, both in line with expectations.
by Jeff Cox
CNBC.com
Inflation edged higher in October as the Federal Reserve is looking for clues on how much it should lower interest rates, the Commerce Department reported Wednesday.
The personal consumption expenditures price index, a broad measure the Fed prefers as its inflation gauge, increased 0.2% on the month and showed a 12-month inflation rate of 2.3%. Both were in line with the Dow Jones consensus forecast, though the annual rate was higher than the 2.1% level in September.
Excluding food and energy, core inflation showed even stronger readings, with the increase at 0.3% on a monthly basis and an annual reading of 2.8%. Both also met expectations. The annual rate was 0.1 percentage point above the prior month.
Key Fed Inflation Gauge Shows PCE ‘Going Sideways’
by Josh Schafer
Yahoo! Finance
The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases were flat in October from the prior month, raising questions over whether progress in getting to the central bank’s 2% goal has stalled.
The core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month during October, in line with Wall Street’s expectations for 0.3% and the reading from September.
Over the prior year, core prices rose 2.8%, in line with Wall Street’s expectations and above the 2.7% seen in September. On a yearly basis, overall PCE increased 2.3%, a pickup from the 2.1% seen in September.
Thanksgiving Dinner Offers a Glimpse Into How We’re Doing On Inflation
by Janna Herron
Yahoo! Finance
Count your blessings: Thanksgiving dinner is cheaper again this season.
That marks the second year in a row the price of the meal retreated from its 2022 high. The average cost is $58.08 for 10 people, according to the American Farm Bureau Federation’s (AFBF) study, which dates back 39 years. The total price is down 5% from last year and is 4.5% lower than in 2022, when the supper commemorating the 1621 harvest feast with the Pilgrims and the Wampanoag people soared to a peak of $64.02.
The survey’s cornucopia of goods includes turkey, stuffing, sweet potatoes, rolls, peas, cranberries, a veggie tray, and pumpkin pie with whipped cream. AFBF’s expanded menu — which also consists of boneless ham, russet potatoes, and frozen green beans — increases the overall cost by $19.26.