The markets had plenty of news to feast on last week, including the latest data on consumer inflation, home sales and home construction. Here are the highlights:

§  Consumer Inflation Headed in Right Direction
§  Inventory of Existing Homes Declined for Fourth Consecutive Month
§  New Home Sales Beat Expectations in November
§  What the Home Construction Slowdown Means for Home Prices
§  Home Builder Confidence Declined Every Month This Year
§  Unemployment Claims Data Illustrates Difficulties for Job Seekers
§  Third Quarter GDP Remains Positive

Consumer Inflation Headed in Right Direction
The Fed’s favorite measure of inflation, Personal Consumption Expenditures (PCE), showed that headline inflation rose 0.1% in November. The year-over-year reading for November declined from 6.1% to 5.5% and while this is a nice decline, it does factor in an upside revision to October’s data. Core PCE, which strips out volatile food and energy prices, rose by 0.2% with the year-over-year change falling from 5% to 4.7%.

What’s the bottom line? Inflation is heading in the right direction and there is hope that inflationary pressures will continue to ease. This is because inflation is calculated on a rolling 12-month basis, which means that the total of the past 12 monthly inflation readings will give us the year-over-year rate of inflation. Inflation readings after November of last year are higher comparisons, so if we continue to see lower monthly readings, the annual rate of inflation will continue to move lower.