US inflation expected to have eased again in November

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US rate-setters’ preferred measure of inflation is forecast to have fallen again in November, bolstering investors’ expectations of a series of rate cuts next year.

The core personal consumption expenditures price index is expected to show prices rose by 3.3 per cent last month — down from 3.5 per cent in the year to October — according to a Reuters poll.

Economists surveyed by Reuters said the month-on-month increase in the core measure — which removes price changes for more volatile items such as food and energy, and is seen as a better gauge of underlying price pressures — would hit 0.2 per cent. It would leave the index on a par with its level in October.

If economists’ projections are right, the November PCE figure would be the latest piece of data to offer good news on price pressures, adding to hopes that the US Federal Reserve is winning an almost two-year long battle against inflation.

“It does look like Friday is going to be another good number. We expect 0.2 per cent, and think 0.1 per cent is more likely than 0.3,” said Stephen Stanley, economist at Santander Bank.

“If we do get a 0.2, or something even lower, then it’s only going to feed the sentiment in the markets that the inflation dangers have largely passed.”

Fed officials expect to make three rate cuts next year, calling time on a series of rate rises that have left the federal funds target at a 22-year high of between 5.25 per cent and 5.5 per cent.

While officials have pushed back against market bets of cuts as soon as March, they appear confident that the US economy will secure a soft landing, with inflation expected to drift back to their 2 per cent goal with only a small rise in unemployment.

Annual headline PCE is expected to fall from 3 per cent in October to 2.8 per cent.

Additional reporting by Jennifer Hughes and Jaren Kerr in New York