Fed's favorite inflation gauge rose 0.2% in December
foxbusiness.comFederated Hermes chief equity market strategist Phil Orlando discusses his expectations for the path of inflation this year.
An inflation measure closely watched by the Federal Reserve rose in December after declining the previous month as high prices continued to weigh on millions of Americans.
The personal consumption expenditures (PCE) index showed that consumer prices rose 0.2% from the previous month, according to the U.S. Department of Labor. On an annual basis, prices climbed 2.6% — unchanged from the previous month.
The figures were both in line with estimates from Refintiv economists.
In a sign the Fed's fight against inflation is slowly making progress, core prices — which strip out the more volatile measurements of food and energy — climbed 0.2% from the previous month and 2.9% from the previous year. It marked the best reading for core inflation since 2021.
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Customers shop at a supermarket in Foster City, California, on Sept. 13, 2023. (Li Jianguo/Xinhua via Getty Images / Getty Images)
While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation. Both the core and headline numbers point to inflation that is steadily returning to the Fed's preferred 2% target.
«The inflation trajectory is improving, giving the Fed leeway to cut rates this year,» said Jeffrey Roach, chief economist at LPL Financial. «However, the Fed has further work to do and should not be tempted to declare 'mission accomplished.'»
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Other figures included in the report
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