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"The Federal Reserve's preferred measure of inflation fell last month in another sign of price pressures easing in the face of the central bank's interest rate hikes.

Friday's report from the Commerce Department showed that U.S. consumer prices slid 0.1% last month from October and rose 2.6% from November 2022. The month-over-month drop was the largest since April 2020 when the economy was reeling from the COVID-19 pandemic."

https://finance.yahoo.com/news/federal-reserves-fa...

This is also consistent with holiday shoppers seeing prices on some items marked lower this year compared to last year. Six things that are actually cheaper this year:

Gasoline           −26.5%
Airline fares      −18.9%
Car + truck rental −12.4%
Major appliances   −10.7%
Televisions        −9.9%
Eggs               -7.9%
https://www.cnbc.com/2023/07/26/goods-and-services... 



  

Actually I suspect that is not really their preferred metric.
I have a hunch they pay more attention to the Multivariate Core Trend figure, which is now at 2.6%. That's the replacement for the UIG.

https://www.newyorkfed.org/research/policy/mct#--:...

It isn't updated yet for the November data yet, that will be in another week or 10 days I think.
But for October the figure was essentially unchanged from 3 months earlier, end July.

The concept here is this: the price change of every item can be considered the sum of one global monetary inflation price change, plus or minus a component specific to that specific commodity.
With a time series, you can minimize the errors in this set of equations and calculate the most likely global monetary inflation rate at each time period, including the latest one.

It's an excellent measure of current year on year monetary inflation rate: how much general purpose purchasing power the dollar lost within the US in the last year, ignoring all solely product-specific issues.
It has the disadvantages that each time you calculate it all the older figures change a bit, and there is no equivalent index level that can be used ad an inflation adjustment for time series.
Those two things don't matter for the Fed's decision making, only for us investors.

Jim

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