New York City – The rate of price increases eased in 2023 as an important inflation gauge released on Friday revealed. The Commerce Department’s personal consumption expenditures price index for December, which is closely monitored by the Federal Reserve, showed a month-on-month increase of 0.2% and a yearly increase of 2.9%, excluding food and energy. Economists had predicted slightly higher increases of 0.2% and 3%.
On a monthly basis, core inflation in November increased by 0.1%, but the annual rate dropped to 3.2%. Including volatile food and energy costs, headline inflation rose 0.2% for the month and remained stable at 2.6% annually.
These figures suggest that inflation, while still at elevated levels, is gradually moving lower. It could potentially provide the Federal Reserve with the green light to start reducing interest rates later this year, especially since the central bank aims for a healthy annual inflation rate of 2%.
The report also revealed that as inflation neared the Federal Reserve’s target, consumer spending experienced a stronger-than-expected increase of 0.7%, surpassing the estimated 0.5%. However, personal income growth slightly slowed to 0.3%, in line with forecasts.
These developments in inflation and consumer spending will have implications for the Federal Reserve’s monetary policy decisions. Analysts will closely watch whether the decline in inflation will prompt the central bank to adjust interest rates and support economic growth.
It is important to note that this information is breaking news, and updates will be provided as more details emerge.