PCE index inflation at 5.5% in November

The Federal Reserve’s preferred measurement of inflation continued to cool off in November, providing yet another welcome indication that this period of painfully high prices has peaked.

The Personal Consumption Expenditures price index, or PCE, rose 5.5% in November from a year earlier and 0.1% from October, the Commerce Department reported Friday. In October, prices rose 6.1% annually. …

Friday’s report also showed that spending continued to rise in November, but at a much slower pace than in previous months. Spending was up 0.1% in November as compared to 0.8% the month before. Personal income increased by 0.4% in November, down from 0.7% in October.

[We can generally expect inflation to stop rising when the Fed rate aligns with the PCE index rate of inflation. We’re getting closer to that mark; at the moment, the Fed base rate is between 4.45-4.5%. The drop in consumer spending means that a recession is likely on the horizon when that parity gets achieved, however. Supply-side economic policies could have helped avoid that. — Ed]