The Federal Reserve’s favorite gauges for monitoring inflation slowed further in December, falling to their lowest pace in more than a year, as consumer spending eased, confirming expectations for the Fed to ease rate hikes .
Specifically, the Personal Consumption Expenditure Price Index excluding food and energy (a more accurate measure of the inflation trajectory according to Fed Chair Jerome Powell) increased 4.4% in December year-over-year. compared to +4.7% in November.
The overall indicator shows a trend increase of 5%, down from 5.5% in November, although still far from the Fed’s 2% target.
On a monthly basis, the core PCE indicator shows an increase of 0.3% (+0.2% in November) while the overall index increases by 0.1% (in line with the previous month).
Personal spending, adjusted for price changes, fell 0.3% in December.