With the recovery proceeding at a moderate rate and the margin of economic slack quite wide, the underlying rate of inflation has been trending lower despite upward pressure from rising costs of energy and other commodities and rising prices of imported goods.
In the 12 months ending in November, overall inflation in PCE prices was 1.0 percent, and the 12-month change in core PCE inflation, which excludes more-volatile food and energy costs, was just 0.8 percent. Both measures show that inflation has drifted lower over the preceding year, and that slowing appears to have been broadly based.