Consumer Prices Rose 2.8 Percent Through November 2025, a Sign of Sticky Inflation

The Federal Reserve’s preferred gauge for inflation in October and November was released belatedly after the government shutdown.

Consumer prices increased moderately in October and November, according to the Federal Reserve’s preferred inflation gauge.

Data released on Thursday from the Personal Consumption Expenditures price index, as the gauge is called, showed a 0.2 percent monthly increase in October and a 0.2 percent increase in November. Compared with the same time the previous year, prices were up 2.7 percent in October and up 2.8 percent in November.

Altogether, the numbers tell a story in which inflation — while far down from its highs after the pandemic — continues to nag households. Goods inflation, for instance, which had been notably cooling since 2022, swung back up after the Trump administration announced tariffs last spring.

The reading is several months old because of the government shutdown last fall, which prevented key data collection functions. But the numbers will provide the Federal Reserve with more information to consider when officials who set interest rates meet next week. Traders expect that Fed officials will decide to not cut interest rate cuts again, for now, as economic growth has surprised to the upside, unemployment remains tame and inflation has plateaued.

The data also showed that consumer spending, the beating heart of the U.S. economy, is holding up, even as concerns about affordability for lower-income households persist.

“Affluent” households “continue to power the economy forward,” said Diane Swonk, the chief economist at KPMG. “The concentration of gains in the hands of a few households masked the underlying pain many are expressing in consumer attitude surveys.”

Personal income increased $80 billion overall in November, registering a steady 0.3 percent monthly rate of growth. But inflation-adjusted “real” disposable personal income was down a tenth of a percentage point in October, before rebounding by a tenth of a percentage point in November — an indication that the bite of price pressures was still hitting households.

Inflation has been above the Fed’s 2 percent target since 2021. Though the White House hopes to provide households with lower mortgage rates, those rates are influenced by inflationary conditions as much as Fed policy. As long as inflation remains nearer to 3 percent than to 2 percent, some Fed officials may be hesitant to lower interest rates. And the parts of the bond market that affect mortgage rates may not budge.

President Trump is expected in the coming weeks to name a nominee to replace the Fed chair, Jerome H. Powell. Yet most market analysts still expect the Fed’s policy committee to operate rate policy according to prevailing economic conditions, not the president’s whims.

While unemployment is historically low, at 4.4 percent as of December, net hiring levels have substantially deteriorated, affecting new graduates and the long-term unemployed alike. Still, new jobless claims, which are measured weekly state by state, have been remarkably low and steady, an indicator that layoffs remain muted.

The latest earnings reports from major American banks — and commentary from their chief executives — indicated resilience, even as geopolitical concerns prompted by the White House’s foreign policy rattle global markets.

One reason for the upbeat assessment is the tax refunds many Americans are expected to receive after cuts were passed into law last year. Researchers at Bank of America expect that new tax provisions — including a higher deduction cap on state and local taxes, “no tax on overtime,” “no tax on tips” and a higher standard deduction for seniors — will boost tax refunds by 26 percent, or almost $100 billion. Much of the bump, they said, will be “concentrated among middle- and higher-income filers.”

The risk to this upside, according to economists, is that it will lead to increased spending in the spring, which could lift inflation even higher again.

Economic growth for the third quarter of 2025 was also revised up slightly Thursday, to a 4.4 percent annualized pace (a tenth of a percentage point higher than the initial estimate) — a reflection of updated adjustments to exports and investment. That was the strongest advance in two years.

Private-sector analyses of economic data largely match government reports. Oren Klachkin, a financial markets economist at Nationwide, believes that strong growth from last fall extended into the final three months of 2025. His firm expects the fourth quarter to register 3.5 percent annualized growth. That would be a powerful close to 2025, even as consumer sentiment remained near recession-level lows.

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