Customers shop for food at a grocery store on Jan. 15, 2025 in Chicago, Illinois.
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Inflation closed out 2024 on a strong note, as a price gauge the Federal Reserve focuses on came in well above the central bank’s target.
The personal consumption expenditures price index increased 2.6% on a year over year basis, 0.2 percentage point higher than the November reading and in line with the Dow Jones estimate.
Excluding food and energy, core PCE registered a 2.8% reading, also meeting expectations and the same as the prior month. Though the Fed considers both readings, historically officials have seen core as the better gauge of long-run inflation.
On a monthly basis, headline PCE rose 0.3% while core increased 0.2%, both in line with forecasts as well.
The Fed targets annual inflation at 2%, a level the price gauge has not seen since February 2021.
The report comes two days after the central bank voted unanimously to hold its key interest rate in a range between 4.25%-4.5%, taking a break after three consecutive cuts totaling a full percentage point.
In remarks delivered Friday morning, Fed Governor Michelle Bowman said she expects inflation to decelerate through 2025, but thinks the central bank should stay on hold until there are clear signs that is happening.
“There is still more work to be done to bring inflation closer to our 2 percent goal. I would like to see progress in lowering inflation resume before we make further adjustments to the target range,” Bowman said in remarks before business leaders in Portsmouth, N.H. “I do expect that inflation will begin to decline again and that by year-end it will be lower than where it now stands.”
The report Friday also showed that personal income increased 0.4% as forecast, while spending rose 0.7%, or one-tenth of a percentage point ahead of the estimate.
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Analyzing the PCE Inflation Rate for December 2024
The Personal Consumption Expenditures (PCE) inflation rate for December 2024 has been a topic of interest for economists and policymakers alike. As we delve into the data and trends, it is crucial to understand the implications of this key economic indicator.
The PCE inflation rate measures the change in prices of goods and services purchased by households in the United States, making it a crucial metric for assessing the overall health of the economy. In December 2024, the PCE inflation rate is expected to be a critical factor in shaping monetary policy decisions and consumer behavior.
As we await the release of the official data, economists are closely monitoring various factors that could impact the PCE inflation rate for December 2024. These factors include changes in consumer spending patterns, fluctuations in energy prices, and global economic conditions.
The implications of the PCE inflation rate for December 2024 are far-reaching, as it can influence interest rates, investment decisions, and overall economic growth. Understanding the trends and drivers behind the PCE inflation rate is crucial for policymakers and investors to make informed decisions in the coming months.
Stay tuned for the release of the official PCE inflation data for December 2024, as we continue to analyze and interpret its implications for the economy.
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PCE inflation, December 2024, inflation rate, consumer price index, economic indicators, Federal Reserve, monetary policy, price stability, inflation trends, inflation analysis, economic data.
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