According to the Commerce Department, consumer prices increased by 2.8% in November compared to the same month last year, rising from a 2.7% annual rate recorded in October. Core prices, which exclude the more volatile food and energy categories, also experienced a 2.8% year-over-year rise in November, slightly above October’s figure of 2.7%.
Consumer spending rose by 0.5% in November compared to the previous month, reflecting a healthy growth rate that suggests the economy is performing well as the year ends.
These figures indicate a generally strong economy with inflation still high, although significantly lower than the peak seen in June 2022. However, hiring has slowed considerably, leaving many job-seekers feeling disheartened, even as the unemployment rate remains low. The data released on Thursday imply that the Federal Reserve may be less inclined to cut its key interest rate in the upcoming meeting, a strategy typically employed if economic downturns are a concern.
“Today’s data should provide the Fed with confidence that the economy is on stable ground, even with a softer labor market,” remarked James McCann, an economist at Edward Jones. “In fact, there appears to be little reason to cut rates at next week’s meeting, and the central bank could maintain its position longer if growth continues to be strong into 2026 and inflation persists above target levels.”
On a month-to-month basis, prices were more restrained: both overall inflation and core inflation increased by only 0.2% in November compared to October. At this rate, inflation would gradually approach the Federal Reserve’s 2% target. The release of Thursday’s data was postponed due to the six-week government shutdown last fall.
The encouraging data on consumer spending follows a different report on Thursday, which indicated the economy grew at a robust annual rate of 4.4% in the July-September quarter, marking the fastest growth in two years. Thursday’s figures suggest continued strong growth as the final quarter of 2025 progresses.
