Latest measure of US inflation shows progress toward Fed’s goal
The Personal Consumption Expenditures price index — the inflation gauge that the Fed uses as its target rate — was up 2.6 per cent annually in December, closing out 2023 with a softer punch than the 5.4 per cent gain a year prior, according to Commerce Department data released Friday, CNN reported.
NEW YORK: The last US inflation snapshot for 2023 revealed that the Federal Reserve’s preferred price gauge didn’t budge last month, holding at 2.6 per cent and wrapping up a year in which price hikes slowed while the economy remained strong.
The Personal Consumption Expenditures price index — the inflation gauge that the Fed uses as its target rate — was up 2.6 per cent annually in December, closing out 2023 with a softer punch than the 5.4 per cent gain a year prior, according to Commerce Department data released Friday, CNN reported.
That’s 0.6 percentage points from the central bank’s goal of 2 per cent.
Excluding energy and food, components that tend to be more volatile, the closely-watched core PCE price index rose 2.9 per cent annually, a slower pace than the 3.2 per cent rate seen in November.
The core PCE gauge is at its lowest point since March 2021.
On a monthly basis, the headline PCE index rose 0.2 per cent, a slight acceleration from the 0.1 per cent drop seen in November when gas prices were tumbling. The core PCE index also rose by 0.2 per cent from the prior month.
Consumer spending finished the year strong and was up 0.7 per cent from November 2023, according to Friday’s report. Adjusting for inflation, spending was up 0.5 per cent, CNN reported.
Economists had projected PCE would rise 2.6 per cent for the 12 months ended December and for consumer spending to grow 0.5 per cent from the month before, according to FactSet estimates, CNN reported.