The Personal Spending Index (PCE) moved in December at a rate of 5% a year, slowing significantly from November’s 5.5%.The measurement was fully in line with analysts ‘ estimate (5%) and now significantly off last summer’s 40-year high.
Similarly, on a monthly level, the PCE rose at a rate of 0.2% in December, as the market predicted, slightly down from November’s 0.3%.In the narrowest part of the index, which excludes volatile prices of products such as energy and food, the structural PCE slowed to 4.4% a year from 4.7% a year, also a 14-month low.
Month-on-month, the structural index rose slightly 0.3 percent, as much as analysts had expected.
The PCE index is seen by the Fed as a better predictor of future inflationary trends, and especially the in its structural part.
They may switch to cheaper goods than more expensive ones, such as chicken thighs instead of breasts, in order to curb costs.
It is noted that the consumer price index had shown a significant slowdown lately, falling in December to 6,5% while in September it moved above 8%.
Consumer Spending Decreased
The Commerce Department said consumer spending-which accounts for more than two – thirds of the country’s total economic activity-fell 0.2 percent in December. At the same time, data for November was downgraded to a decrease of 0.1% instead of a 0.1% increase initially recorded, as analysts had expected in a Reuters survey.
