Source: Reference News

Reference News Network reported on February 3 that according to the Associated Press on January 31, an inflation measure closely watched by the Federal Reserve rose slightly in December last year, once again indicating that while inflation has intermittently cooled, some consumer prices remain high.

According to the report released by the U.S. Department of Commerce on January 31, the U.S. personal consumption expenditure (PCE) price index rose 2.6% year-on-year in December last year, higher than 2.4% in November, and rose for the third consecutive month. Excluding food and energy items with greater volatility, the core PCE rose 2.8% year-on-year, the same as in November and October.

The data came two days after Federal Reserve officials decided to pause their interest rate cuts in part because inflation has remained roughly around 2.5% for the past six months, above their 2% target.

Still, there were some positive signs in the report. Inflation, measured over shorter time horizons, is slowing: Core PCE edged up 0.2% in December from the previous month. That pace is roughly in line with the Fed’s annual target. Economists and Fed officials closely watch core PCE because it better reflects where inflation is headed.

Driven by a sharp rise in gasoline prices, the overall inflation rate rose 0.3% in December last year. If it continues to rise at this level, the inflation rate will exceed the Fed's target.

In the past three months, the core PCE rose by only 2.2% on an annualized basis, down from 2.6% in November.

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