Contact us
CALL US NOW 1-888-GOLD-160

Fed’s Favorite Price Inflation Measure Comes in Slightly Hotter Than Expected

  by    0   3

The Federal Reserve’s favorite inflation indicator came in slightly higher than expected for November. This is another indication that while price inflation appears to be easing some, the data indicates it is far from whipped.

In November, the Core Personal Consumption Expenditures (PCE) deflator came in at 4.7% on an annual basis. This was slightly higher than the 4.6% expectation. Month on month, core PCE rose 0.2%, in line with projections.

Core PCE excludes volatile food and energy prices.

Overall PCE rose 5.5% on an annual basis and 0.1% month-on-month.

Looking at the core PCE deflator data over the last several months, it’s clear that PCE continues to run hot but with a slight downward trend.

  • November 2022 4.7 %
  • October 2022 5.0 %
  • September 2022 5.2%
  • August 2022 4.9%

The Fed closely watches the PCE data. The central bankers at the Fed like core PCE because it tends to understate rising prices the most.

The mainstream spin is that this is a further indication that “inflation is cooling.” CNN called it “a welcome indication that the period of painfully high prices has peaked.” This is similar to the messaging we heard after the November CPI data came out.

But it’s important to remember that while price inflation is trending downward, it isn’t anywhere near the mythical 2% Fed target. Meanwhile, producer prices rose more than expected in November, meaning there could still be some more consumer price increases in the pipeline as businesses pass those costs on. Saying inflation is “done” is clearly a bit premature. Nevertheless, many people seem to believe the war on inflation is nearing a successful end despite the continued hawkishness coming from the Fed.

At this point, you can spin the price inflation data either way. You can argue it has peaked and the downward trend looks good. But you can also make the case that inflation remains extremely high and we are far from victory.

This is a comfortable spot for the Fed. As long as the central bankers can plausibly deny any significant economic downturn, they can continue with their hawkish messaging. But it also gives them wiggle room to claim victory and pivot when the economy tanks.

It is reasonable to think that price inflation will continue to cool. The math works in its favor. We have big month-on-month increases from 2021 rolling out of the annual average. That pushes the yearly increase lower. Meanwhile, the economy is slowing. Make no mistake, high interest rates are subduing economic activity. An economy built on easy money and credit can’t function in this high interest rate environment.

But the bigger problem is that this “high” interest rate environment is high enough to break the economy but still not high enough to truly tame inflation. And the moment the Fed pivots, we are right back on the inflation train.

401k IRA Rollover Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Silver Jewelry Sales Boom Will Help Drive Overall Silver Demand Higher

Jewelry production is an important driver of overall silver demand. In 2022, the amount of silver used in jewelry was up around 29% as overall silver demand hit record levels. Silver jewelry production used around 235 million ounces of silver. And according to a recent survey by the Silver Institute, silver jewelry sales are on […]


Chinese Gold Demand Continued to Surge in February

After ending 2022 on an upward trend that continued into January, Chinese gold demand surged again in February as the economy continues to rebound from government-imposed COVID policies. Gold withdrawals from the Shanghai Gold Exchange (SGE) totaled 169 tons in February. This is a reflection of strong wholesale demand and signals an ongoing rebound in […]


The Exploding Budget Deficit Is Another Big Problem for the Federal Reserve

February has historically been a big budget deficit month, but the Biden administration still managed to overachieve and run the second-largest February deficit ever. The only time the US government has run a February deficit bigger than the $262.4 billion shortfall last month was in February 2021 in the midst of the COVID stimulus. This […]


India’s Oil Deals With Russia Further Erodes Petrodollar Dominance

Every government policy has consequences – some intended and some unintended. There is at least one serious unintended consequence of the economic sanctions levied against Russia after its invasion of Ukraine – an erosion of the US dollar dominance.


Credit Card Borrowing Spiked in January Even as Big-Ticket Spending Slowed

In January, retail sales came in much hotter than expected. Now we know how consumers paid for the spending spree. They put it on credit cards. After slowing modestly in December, growth in revolving debt spiked again in January. But a slowdown in non-revolving credit moderated the overall increase in consumer debt. Overall, this signals […]


About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
View all posts by

Comments are closed.

Call Now