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

Excluding often volatile food and energy costs, the core index rose 4.7% annually, up from 4.2% in October. While the overall index was in line with estimates, the core was below. Both are still way above the Fed’s stated goal of average annual inflation of 2%.

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

Americans also spent 0.4% more in November than in October, as their incomes rose 0.6%.

“The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits,” the report noted. “Within compensation, the increase reflected increases in both private and government wages and salaries.”

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

“The increase in services was widespread, led by housing and utilities. Within goods, an increase in nondurable goods (mainly gasoline and other energy goods) was partly offset by a decrease in durable goods (led by recreational goods and vehicles as well as motor vehicles and parts),” according to the report.

The economy is ending 2021 strongly, with third-quarter growth revised upward to 2.3% on Wednesday and most economists forecasting a much higher rate for the fourth quarter.

Recent readings on consumer confidence have also ticked up or remained stable after a dip following November’s consumer inflation report that had consumer prices rising at an annual rate of 6.8% and the spread of the new and highly contagious omicron variant of the coronavirus.

The Conference Board’s Consumer Confidence Index rose to 115.8 in December, up from a revised 111.9 in November. The Present Situation Index – which measures consumers’ view of the current economy – edged down slightly to 144.1 from 144.4 last month. The Expectations Index – a forward-looking view of how consumers view the short-term economic outlook – rose to 96.9 from 90.2.

And the Forbes Advisor-Ipsos weekly tracker of consumer confidence released Tuesday showed it held steady after a recent dip. Now at 55.1, the index is 1.4 points above its pandemic-era average and just five points below March of 2020.

“I think we are seeing some countervailing forces” such as inflation and omicron, says Chris Jackson, senior vice president and head of polling at Ipsos. “But at the same time, people are feeling somewhat more confident.”

Another confidence survey, the HPS-CivicScience Economic Sentiment Index, released Wednesday, increased 0.5 points to 41.5, its highest position 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 U.S. economy shot up similarly, rising 2.4 points to a four-month high of 38.6,” the release said.

Most forecasters see the economy doing well in 2022, although growing at a slower pace than in 2021 as it faces the headwinds of a Fed fighting inflation and uncertainty over the coronavirus.