Inflation gauge favored by Fed showed price growth picked up in December
2025-01-31
Category: economic

The Federal Reserve&apos;s preferred inflation gauge showed prices rose as expected in December, and it remains above the central bank&apos;s target level amid its ongoing efforts to wrestle down inflation. The Commerce Department on Friday reported that the personal consumption expenditures (PCE) index was up 0.3% from the prior month and 2.6% on an annual basis. Those figures were in line with the estimates of economists polled by LSEG. Core PCE, which excludes volatile food and energy prices, rose 0.2% for the month and increased 2.8% from a year ago, in line with estimates. Federal Reserve policymakers are focusing on the PCE headline figure as they try to slow the pace of price increases to their target of 2%, though they view core data as a better indicator of inflation. Headline PCE ticked higher from an annual rate of 2.4% in November to 2.6% last month, while core PCE has been at 2.8% for three consecutive months. Headline PCE showed prices for goods were flat in December, while prices for services rose by 3.8% from a year ago. Food prices were up 1.6% last month when compared with a year ago, while energy prices were down 1.1% during that period. Wages and salaries were up 0.4% in December compared with the prior month &#x2013; a slight deceleration after October and November both saw wage and salary growth of 0.5% in those months. The personal savings rate as a percentage of disposable income was 3.8% in December. That metric declined from 4.3% in October to 4.1% in November and had been nearly 5% last spring. This is a developing story. Please check back for updates.