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

<ul><li><a href="https://www.forexlive.com/news/us-november-pce-core-inflation-32-vs-33-expected-20231222/" target="_blank" rel="follow">Prior </a>was +3.2%</li><li>PCE core m/m +0.2% vs +0.2% expected</li><li>Prior m/m core +0.1%</li><li>Headline PCE +2.6% vs +2.6% expected (prior +2.6%)</li><li>Deflator m/m +0.2% vs +0.2% expected (prior -0.1%) </li><li><a href="https://www.bea.gov/sites/default/files/2024-01/pi1223.pdf" target="_blank" rel="nofollow">Full report</a></li></ul><p>Consumer spending and income for December:</p><ul><li>Personal income +0.3% vs +0.3% expected. Prior month +0.4% </li><li>Personal spending +0.7% vs +0.4% expected. Prior month +0.2% (revised to +0.4%)</li><li>Real personal spending +0.5% vs +0.3% prior (revised to +0.5%)</li></ul><p>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.</p><p>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.</p><p>Three-month and six-month annualized core and headline PCE are now both below the Fed target.</p><ul><li>Goods prices -0.2% m/m</li><li>Services prices +0.3% m/m</li><li>Real personal spending up 3.2% y/y</li><li>Services inflation 3.9% y/y vs 4.1% prior</li></ul>

This article was written by Adam Button at www.forexlive.com.