PCE Inflation Rises 2.6% in December as Expected

The BEA's Personal Income and Outlays report showed inflation remained elevated at the end of 2024. The Fed’s preferred inflation gauge, the PCE price index, rose 2.6% year-over-year in December—the highest since May—and climbed 0.3% from November, marking the largest monthly increase since April. Both readings matched expectations.

The core PCE price index, which excludes food and energy, rose 0.2% month-over-month, as expected. Annually, core PCE increased 2.8% in December, matching forecasts and remaining unchanged from November.

PCE Price Index

Personal consumption expenditures (PCE) measures and tracks changes for all domestic personal consumption. Core PCE measures the changes in personal consumption less food and energy, making it less volatile than the headline PCE. The PCE Price Index is calculated using PCE data and is a key way to measure changes in purchasing trends and inflation.