() — The Federal Reserve’s (Fed) preferred inflation gauge showed prices rose at a slower pace in December, signaling further progress in the central bank’s battle with higher prices.
The Personal Consumption Expenditures, or PCE, price index rose 5% year-on-year in December, the Commerce Department reported Thursday.
In December alone, prices rose 0.1% from November.
Core PCE, which excludes the more volatile food and energy categories, rose 4.4% annually, down from November’s annual rate of 4.7%. On a monthly basis, it was up 0.3%.
The core PCE is the Fed’s favorite inflation gauge, as it provides a more complete picture of consumer costs and spending.
The data showed that Americans fell back in December, with spending falling 0.2% from the previous month. Personal income increased 0.2% last month, the smallest increase since April.
Through much of 2022, consumer spending remained robust despite high inflation, rising interest rates, and simmering recession fears. However, as the months passed, economic data suggested that consumers were running out of cash: reliance on credit grew and delinquencies began to rise, while savings levels declined.
Retail sales fell 1.1% in December, the Commerce Department reported earlier this month.
