Prices finally fell last month after 3.5 years of increases

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New government data showed prices notching a monthly decline for the first time since April 2020, adding to an improving picture on inflation as the new year looms.

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The Personal Consumption Expenditures Price Index (PCE), one of two major readings on inflation, fell by 0.1% between October and November, the Bureau of Economic Analysis said Friday — the first monthly decline in more than 3 1/2 years.

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Lower gas prices and cheaper goods contributed to the modest decline in Friday’s PCE numbers. Because prices have largely continued to rise this year, they still clocked in 2.6% higher than in November 2022. But that’s an improvement from the PCE’s 5.5% yearly inflation rate back in January and 7.1% rate in June 2022.

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Earlier this month, the Consumer Price Index, the other major inflation measure alongside the PCE index, showed annual inflation slowing to 3.1% in November, easing a bit from a 3.2% rate the month before.

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As prices fell in November, American households’ capacity to spend increased, the BEA’s Friday report showed. Real disposable income, which adjusts for inflation, grew by 0.4% between October and November, after a summer of nearly no growth.

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