Core PCE Steady, Data Gaps Persist

The Federal Reserve’s preferred inflation gauge remained subdued through October and November 2025, even as data disruptions raised questions about how much confidence policymakers should place in the figures.

Core PCE inflation came in at 0.208% in October and 0.168% in November, suggesting continued disinflation. However, October’s reading was not seen directly in the data.

Inflation by Estimation

Because a federal government shutdown delayed price collection, the Bureau of Economic Analysis relied on statistical estimates for October. The agency filled the gap by:

Using the geometric average of September and November prices
Applying seasonal adjustment factors from the previous year

As a result, part of the recent inflation narrative is built on inference rather than observed price surveys, a nuance that markets are closely watching.

Policy and Political Implications

Despite the caveat, the estimated figures reinforced the view that underlying inflation pressures remain contained. That interpretation supports arguments for a pause in rate hikes and keeps the door open to future easing, a backdrop that carries added sensitivity in an election year marked by debates over economic performance.

Consumption Holds Up

On the activity side, real consumer spending rose 0.3% in November, led by steady demand for services. Broader GDP revisions for the fourth quarter of 2025 showed firmer real final sales to private domestic purchasers, pointing to resilient household demand despite lingering inflation concerns.

Why Caution Still Matters

While the headline message suggests stable inflation, the reliance on estimated data means the picture is less solid than it appears. For both policymakers and investors, the takeaway is clear: the disinflation trend looks intact, but confidence should be tempered until fully observed data replaces statistical assumptions.

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