US December PCE core inflation 2.9% y/y vs 3.0% expected

PCE core y/y

  • Prior was +3.2%
  • PCE core m/m +0.2% vs +0.2% expected
  • Prior m/m core +0.1%
  • Headline PCE +2.6% vs +2.6% expected (prior +2.6%)
  • Deflator m/m +0.2% vs +0.2% expected (prior -0.1%)
  • Full report

Consumer spending and income for December:

  • Personal income +0.3% vs +0.3% expected. Prior month +0.4%
  • Personal spending +0.7% vs +0.4% expected. Prior month +0.2% (revised to +0.4%)
  • Real personal spending +0.5% vs +0.3% prior (revised to +0.5%)

The soft headline inflation number in yesterday’s GDP data led to broad speculation about a downside miss on December headline PCE. However it was the core where there was a slight miss.

One spot the Fed watches closely is PCE services ex-energy and housing. It rose 0.3% m/m compared to 0.1% prior and that could help to lift the dollar. Treasury yields have ticked up to session highs in the aftermath but only up 1-2 bps since the release.

Three-month and six-month annualized core and headline PCE are now both below the Fed target.

  • Goods prices -0.2% m/m
  • Services prices +0.3% m/m
  • Real personal spending up 3.2% y/y
  • Services inflation 3.9% y/y vs 4.1% prior
CoreDecemberexpectedInflationPCE
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