December PCE Inflation Hits 2.9% Year-Over-Year

The Commerce Department reported Friday that a key measure of inflation accelerated in December, with the personal consumption expenditures price index rising 0.4 percent from the previous month and 2.9 percent from a year earlier. The increase marked the highest monthly gain since February of the prior year and the largest annual rise since March 2024, up from November's 2.8 percent year-over-year figure.

The report, which covers the Federal Reserve's preferred inflation gauge, also showed core prices, excluding volatile food and energy costs, climbing 0.4 percent in December, the same monthly pace as the overall index. Core inflation reached 3 percent year over year, accelerating from 2.8 percent in November and surpassing economists' expectations of a 0.3 percent monthly increase and 2.9 percent annual gain. The data, delayed by a six-week government shutdown last fall, indicate that inflationary pressures persist despite a decline from a peak near 7 percent in 2022.

Consumers continued spending at a steady rate amid the rising prices, with personal consumption increasing 0.4 percent in December, matching November's growth. Specific categories drove the uptick: prices for...