Core PCE 0% November and +1.4% YOY, Inflation OK. Savings at +4.7% As Consumers Remain Tight.

Overall Personal Consumption Expenditures, the Fed’s favorite measure of consumer inflation, were 0.2% in November and 1.5% year-over-year through November. Excluding volatile oil and food costs from the readings, “Core” PCE price index for November was 0% and 1.4% YOY through November. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At 1.4%, Core inflation is within their comfort zone, especially since the FOMC confirmed subdued inflation for “some time” last week, and PCE inflation has been either down or even since summer.

Personal income increased 0.4% percent in November, and wages were up 0.3% from last month. Households kept hoarding cash with Personal Savings Rate rising to 4.7%, which marks a three-month trend of savings in this range, bringing the 12 month average to 4.5%. In May, personal savings hit an all-time record high of 6.9%. Below are all key details from the Personal Income & Outlays report.