UPDATES WITH PRESIDENT JOE BIDEN'S COMMENTS
By Ovunc Kutlu
ISTANBUL (AA) - The US Federal Reserve's preferred inflation indicator softened in December 2023 on an annual basis, according to Commerce Department figures released Friday.
The core personal consumption expenditures (PCE) price index rose 2.9% annually in December, down from the 3.2% year-on-year gain in November, and came in lower than the market expectation of 3%.
On a monthly basis, however, the index rose 0.2% in December, slightly accelerating from a 0.1% monthly increase in November, and came in line with market estimates.
In December, food prices increased 0.1% on a monthly basis and energy prices rose 0.3%, compared to the previous month.
Annually, food prices were up 1.5%, but energy prices decreased 2.2% in December 2023, compared to the same month of last year.
The PCE price index, which includes food and energy prices, annually rose 2.6% in December, following a 2.6% year-on-year gain in November, also coming in line with market estimates.
That index, on a monthly basis, rose 0.2% in December, following a 0.1% month-on-month decline in November, also in line with the market expectation.
The softening core PCE price index on an annual basis could allow the Fed to begin interest rate cuts earlier than anticipated this year.
The Fed has made a total of 11 interest rate increases between March 2022 and July 2023 to tame record inflation, carrying the federal funds rate to the 5.25%-5.5% target range – the highest in 22 years.
The central bank skipped four rate hikes last year, while its first monetary policy meeting of 2024 will conclude next Wednesday.
President Joe Biden later said inflation retreated to the pre-pandemic level of 2% over the last six months of 2023, describing it as "an important milestone that means more breathing room for working families."
"Our economy grew by more than 3 percent in 2023, while inflation has been at 2 percent in the second half of the year, and unemployment remained below 4 percent for a second year," he said in a statement released by the White House.
"This means significant progress for American workers—with wages, wealth, and employment all higher than they were four years ago," he added.
Biden said his administration is focused on working to lower costs for American families.