Prices ticked up in November as Americans keep spending, a key inflation measure shows

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WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge ticked up in November in the latest sign that prices remain stubbornly elevated, while consumers spent at a healthy pace.

Consumer prices rose 2.8% in November from a year earlier, the Commerce Department said Thursday, up from a 2.7% annual pace in October. Excluding the volatile food and energy categories, core prices also increased 2.8% in November from a year ago, slightly higher than October’s 2.7%.

Consumer spending climbed 0.5% in November from the previous month, the report also showed, a solid increase that hits at an economy growing at a healthy pace in the final three months of last year.

The figures point to a mostly strong economy with inflation still elevated, but down sharply from a four-decade peak in June 2022. Hiring has slowed to a crawl, however, leaving job-seekers frustrated even as the unemployment rate stays low. Thursday's figures suggest that the Federal Reserve will be less likely to reduce its key interest rate when it meets next week, a tact typically used if it is worried about a stumbling economy.

“Today’s data should reassure the Fed that the economy remains on a solid footing, despite a cooler labor market,” said James McCann, an economist at Edward Jones. "Indeed, there looks to be little urgency to cut rates at next week’s meeting, and the central bank could stay on hold for longer should growth remain robust into 2026 and inflation continue to run at above target rates.”

On a monthly basis prices, were milder: Both overall inflation and core inflation moved up just 0.2% in November from October. At that pace, over time inflation would move closer to the Federal Reserve’s target of 2%. Thursday’s data was delayed by the six-week government shutdown last fall.

The solid figures on consumer spending follow a separate report Thursday which showed that the economy expanded at a healthy 4.4% annual rate in the July-September quarter, the fastest growth in two years. Thursday's data points to continued solid growth in the final quarter of 2025.