PCE inflation rose 5.7% in November, keeping pressure on Biden
- PCE inflation grew 0.6% monthly and jumped 5.7% year-on-year in November.
- Data shows prices continued to rise at the fastest rate in decades as Americans entered the holiday season.
- High inflation will keep additional pressure on President Joe Biden as he enters his second year in office.
Personal consumption expenditure data for November shows that the prices of basic consumer goods continued to rise at a strong pace, with the key measure of inflation rising 0.6% in the month and 5 , 7% compared to the same period in 2020.
This annual gain is the biggest jump in the PCE index since 1982. Another key inflation indicator previously released by the Commerce Department, the Consumer Price Index, was also the highest since 1982 in November. . This means that today’s PCE jump was somewhat expected, but it does confirm how dramatically inflation rose in November, pretty much across the board.
The Biden administration and the
had argued for much of 2021 that inflation would be “transient,” although that term was left undefined for much of the year and was withdrawn this fall by Fed Chairman Jerome Powell and Secretary of the Treasury Janet Yellen. The Fed’s projections have steadily exceeded inflation this year, after decades in which the Fed has beaten inflation which has remained around 2%.
Yet, to account for the implicit argument of the so-called Team Transitory, the 5.7% annual figure is skewed against a pre-vaccine deflationary era in November 2020, and on a two-year basis, the inflation figure is closer to 4%.
Commerce Department data released Thursday shows core PCE – which excludes more volatile food and energy prices – rose 0.5% in November. Food and energy prices rose 0.7% and 3.6% respectively during the month. Core PCE is up 4.7% from November 2020.
“While month-to-month data can be volatile, overall this report is consistent with a strengthening labor market supporting consumer spending as post-pandemic expansion continues at a low. steady pace, ”wrote the Council of Economic Advisors. Twitter.
The CEA also warned that November data pre-dates the Omicron variant’s rise, and it’s unclear how this variant will affect the consumption of goods and services in December and beyond. In other words, high inflation could take much longer to exit the economy.