December PCE Accelerates to 3% as Prices Rise
December PCE rose 0.4% monthly and 2.9% year over year, with core PCE at 3.0%, complicating the Federal Reserve’s policy outlook.
Overview
The Commerce Department said Friday that the PCE price index rose 0.4% in December and 2.9% year over year, while core PCE rose 0.4% monthly and 3.0% annually.
The figures indicate inflation remains above the Federal Reserve's 2% target, signaling persistent price pressure that could affect monetary policy, economists said.
Economists and Fed watchers said the hotter-than-expected reading will draw closer scrutiny from Federal Reserve officials, with Heather Long warning officials 'won't just be watching the labor market'.
The report also showed consumer spending rose 0.4% in December and the personal savings rate was 3.6% in December, the Commerce Department said.
January's PCE inflation data is scheduled for release on March 13, and economists said a further uptick could strengthen expectations that the Fed would delay rate cuts.
Analysis
Center-leaning sources report this story neutrally, relying on data-driven descriptions and multiple context points (PCE vs CPI, monthly and yearly rates, sector examples). They attribute opinions (public unhappiness, Trump’s demands) to sources and avoid loaded language, focusing on factual figures, Fed minutes, and spending trends for balance.
Sources (4)
FAQ
The Federal Reserve's inflation target is 2% over the longer run.
Core PCE rose 0.4% monthly and 3.0% annually in December.
The hotter-than-expected 3.0% core PCE reading complicates the Fed’s policy outlook, likely drawing scrutiny and potentially delaying rate cuts as inflation remains above the 2% target.
The target range for the federal funds rate is 3.5% to 3.75%, maintained by the FOMC after prior rate trims.
January's PCE inflation data is scheduled for release on March 13.
History
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