Sticky Inflation Shows Signs of Easing After November Consumer Price Data

The recent release of the Personal Consumption Expenditures (PCE) price index has sparked discussions among economists and market analysts. The PCE inflation growth for November was reported at 2.4%, which is a slight increase from 2.3% in October. However, this figure fell short of economists' expectations, which had predicted a rise to 2.5%.

Expert Insights: The implications of the November PCE data are being analyzed for what they may mean for the Federal Reserve and market conditions as we approach 2025. "Sticky inflation appeared to be a little less stuck this morning," noted Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley, in an interview with CNBC.

Larkin pointed out that the Fed's preferred inflation indicator coming in lower than anticipated might alleviate some of the disappointment following the recent interest rate announcement by the Federal Reserve on Wednesday.

Market reactions to this data have been positive, with major indices showing gains. The SPDR S&P 500 (ARCA: SPY) has risen by 1.7%, trading at $594.40, while the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 index, is up by 1.8%, reaching $523.54 at the time of this report.

Looking Ahead: Joe Brusuelas, chief economist at RSM US, has indicated that it is becoming "increasingly likely" that the economy has accelerated in the current quarter. This development raises concerns about potential inflationary pressures and could prompt a more hawkish approach from the Federal Reserve moving forward.

Brusuelas commented, "Given the likelihood of rising service prices and rents as we enter the new year, it’s expected that the Fed will adopt more cautious communication. The central bank seems to have shifted its focus toward price stability over employment as we head into 2025."

inflation, economy, markets