Key inflation indicators released on Friday showed that the pace of price increases is slowing as 2023 draws to a close.
The Commerce Department's personal expenditure price index for December, a key indicator for the Federal Reserve, rose 0.2% on the month and rose 2.9% annually, excluding food and energy. Economists interviewed by Dow Jones expected increases of 0.2% and 3%, respectively.
In monthly terms, core inflation rose from 0.1% in November. However, the annual rate decreased from 3.2%. Including volatile food and energy costs, headline inflation also rose by 0.2% for the month and remained steady at an annualized rate of 2.6%.
This latest data adds to the evidence that inflation is still high but continues to make progress towards a decline. The data may also give the Fed the green light to start cutting interest rates later this year. The central bank sets 2% as a healthy annual inflation rate.
Summary so far inflation is moving closer to the Fed's target, consumer spending increased by 0.7%, stronger than the estimate of 0.5%. Personal income growth fell slightly to 0.3%, in line with expectations.
