Moderation in Inflation: In December, the Federal Reserve’s preferred gauge of inflation, the Personal Consumption Expenditures (PCE) Price Index, fell to its lowest level since September 2021. According to a report from the Commerce Department, the core PCE Price Index, which excludes volatile food and energy prices, rose by 0.3% last month to an annual rate of 4.4%. This is a decrease from the 4.7% rate in November and the lowest 12-month total since October 2021.

The headline PCE Price Index also showed a decrease, rising by only 0.1% for the month and 5% year-over-year. This is a significant drop from the previous month’s 5.5% pace and the smallest annual rate since September 2021.

The report also highlighted that goods prices decreased by 0.7%, with energy costs experiencing a 5.1% slump. On the other hand, food prices increased by 0.2% and prices for services went up by 0.5%.

In addition, the report showed that consumer spending, adjusted for inflation, decreased by 0.3%, marking the second consecutive month of declines. Personal income growth also slowed, rising by only 0.2%, which is the smallest gain in eight months.

Overall, these figures indicate that inflation moderated in December, with prices for goods declining, and consumers cutting back on spending.

Moderation in Inflation: Inflation Moderated in December

1. Introduction: PCE Inflation Moderated in December
   • Brief overview of the Federal Reserve’s preferred gauge of inflation, the PCE Price Index
   • Mention that the index reached its lowest level since September 2021
2. Core PCE Price Index:
   • Explanation of what the core PCE Price Index is
   • Statistics on the index’s performance in December (0.3% increase to an annual rate of 4.4%)
   • Comparison to November’s rate (4.7%) and the lowest 12-month total since October 2021
3. Headline PCE Price Index:
   • Explanation of what the headline PCE Price Index is
   • Statistics on the index’s performance in December (0.1% increase and 5% year-over-year)
   • Comparison to the previous month’s pace (5.5%) and the smallest annual rate since September 2021
4. Prices for Goods:
   • Overview of how prices for goods fared in December
   • Statistics on the decrease in goods prices (0.7%)
   • Breakdown of specific goods, such as energy costs (5.1% slump) and food prices (0.2% increase) and services (0.5% increase)
5. Consumer Spending and Personal Income:
   • Explanation of how consumer spending and personal income were affected in December
   • Statistics on the decrease in consumer spending (adjusted for inflation)
   • Information on the slow growth of personal income (0.2%, the smallest gain in eight months)
6. Conclusion:
   • Summary of key points from the report
   • Emphasis on the moderation of inflation in December and the decline in prices for goods and consumer spending.