The Labor Department reported on Thursday that an inflation barometer that is the Federal Reserve’s preferred indicator of pricing pressure rose at an annual rate of 5.7 percent last month.

The core index rose 4.7 percent year on year, up from 4.2 percent in October, when volatile food and energy costs were excluded. While the overall index met expectations, the core index fell short. Both are still significantly higher than the Fed’s stated goal of 2% annual inflation.

It is the first inflation reading since Fed Chairman Jerome Powell announced an aggressive shift in policy to combat inflation last week, with the central bank announcing a stepped-up reduction in its purchases of Treasuries and mortgage-backed securities. In addition, the Fed indicated that it may consider raising interest rates three times next year, a more hawkish stance than it had previously taken.

Americans also spent 0.4 percent more in November than they did in October, as their incomes increased by 0.6%. “The increase in personal income in November was primarily due to increases in employee compensation and government social benefits,” according to the report. “Within compensation, the increase reflected both private and government wage and salary increases.”

On the spending side, the increase was almost entirely driven by increased spending on services.

“The increase in services was widespread, with housing and utilities leading the way.” According to the report, “an increase in nondurable goods (primarily gasoline and other energy goods) was partially offset by a decrease in durable goods (led by recreational goods and vehicles as well as motor vehicles and parts).”

The economy is on track to finish 2021 strongly, with third-quarter growth revised up to 2.3 percent on Wednesday and most economists forecasting a much higher rate for the fourth quarter. Consumer confidence has also recently increased or remained stable, following a dip following the November consumer inflation report, which showed consumer prices rising at an annual rate of 6.8 percent and the spread of the new and highly contagious omicron variant of the coronavirus.

The Consumer Confidence Index of the Conference Board increased to 115.8 in December, up from a revised 111.9 in November. The Present Situation Index, which measures consumers’ perceptions of the current economy, fell slightly to 144.1 from 144.4 the previous month. The Expectations Index, which measures how consumers perceive the short-term economic outlook, increased to 96.9 from 90.2.

And, according to the Forbes Advisor-Ipsos weekly tracker of consumer confidence, which was released on Tuesday, it has remained stable after a recent dip. At 55.1, the index is 1.4 points higher than its pandemic-era average and only five points lower than March 2020. “I believe we are seeing some countervailing forces,” such as inflation and omicron, according to Chris Jackson, senior vice president and head of polling at Ipsos. “However, people are feeling a little more confident.”

The HPS-CivicScience Economic Sentiment Index, which was released on Wednesday, rose 0.5 point to 41.5, its highest level in two months.

“The ESI measured that over the past two weeks, consumer confidence in the job market increased 2.5 points to 56.8 – the highest level in three months – and confidence in the overall US economy shot up similarly, rising 2.4 points to a four-month high of 38.6,” according to the release.

Most forecasters expect the economy to perform well in 2022, albeit at a slower rate than in 2021 due to the headwinds of a Fed fighting inflation and uncertainty over the coronavirus.