The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) Index, showed headline inflation rose 0.128% in November and 2.4% year over year, slightly better than expected.
Core PCE, which excludes food and energy, rose 0.125%, keeping year-over-year core inflation at 2.8%, below the market’s expectation of 3%. Analysts had expected a rise to 2.9%, but shelter costs, while still elevated, contributed less than anticipated.
Shelter remains the largest driver of inflation, rising 4.78% annually. However, real-time CoreLogic data shows a smaller 1.7% increase. Adjusting for real-time shelter data, core inflation would be 2.3%, not 2.8%.
This month’s core reading, at 0.115% (annualized to 1.4%), was very low, but year-over-year inflation stayed at 2.8% due to last November’s low comparison point. Higher replacement figures starting in January could accelerate inflation progress if monthly readings stay tame and shelter prices adjust further. And if there is progress or lower inflation the Bond market should garner interest from investors pushing mortgage rates lower!
Source : https://bit.ly/3Vq16rc
By: Jon Iacono