FILE – Shoppers are silhouetted against the sky as they arrive for a sale at a Best Buy store on Friday, Nov. 25, 2022, in Overland Park, Kansas. On Friday, the Commerce Department releases its November report on consumer spending. The report contains a measure of inflation that is closely watched by the Federal Reserve, which has aggressively tried to rein in inflation this year by raising its key interest rate seven times. (AP Photo/Charlie Riedel, File)
WASHINGTON (AP) — A measure of inflation closely watched by the Federal Reserve slowed last month, another sign that a long rise in consumer prices appears to be winding down.
Friday’s Commerce Department report showed prices rose 5.5% in November from a year earlier, up from a revised 6.1% rise in October. Excluding the volatility of food and energy prices, so-called core inflation increased by 4.7% over the previous year.
On a monthly basis, prices rose 0.1% from October to November after rising 0.4% the previous month. Core prices rose 0.2%.
The Fed is believed to monitor the Commerce Department’s inflation gauge issued Friday, called the Personal Consumption Expenditures Price Index, even more closely than the Labor Department’s better-known consumer price index. The CPI rose 7.1% in November from the previous 12 months, below June’s 9.1% year-on-year increase, which had been the biggest such jump in four decades.
The PCE index tends to show a lower inflation rate than the CPI. Partly because rents, which have skyrocketed, have twice the weight in the CPI than in the PCE.
The PCE price index also seeks to account for changes in the way people shop when inflation rises. As a result, you can capture, for example, when consumers switch from expensive national brands to cheaper store brands.