The personal consumption expenditures (PCE) price index dropped to a 2.6 percent annual gain in November, according to data released Friday by the Bureau of Economic Analysis. 

October’s PCE price index was also revised down to a 2.9 percent year-over-year. 

Excluding more volatile food and energy prices, “core” PCE dropped to 3.2 percent annually in November from 3.4 percent in October. 

The new inflation report is the latest sign that the U.S. economy is on track for a “soft landing” from high inflation without a recession.

“Within services, the largest contributors to the increase were housing and utilities (led by housing) and food services and accommodations (led by purchased meals and beverages). Within goods, the leading contributor to the decrease was gasoline and other energy goods (led by motor vehicle fuels, lubricants, and fluids),” the Bureau of Economic analysis wrote as part of its latest analysis. 

The PCE price index is the Federal Reserve’s main measure of inflation. The central bank aims for 2 percent annual inflation as part of its mandate. 

The latest inflation report has some thinking the Fed could start cutting interest rates sooner than expected. 

“We entered 2023 worried about inflation and how many more times the Fed was going to raise rates,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a statement. 

“But we are ending 2023 surprised at how low inflation has come down – especially as unemployment has remained so low – and are wondering how many times the Fed will cut,”

The Hill’s Taylor Giorno has more here.