US PCE inflation heats up in December

Core Insights - Underlying U.S. inflation increased more than expected in December, with further acceleration anticipated in January, reinforcing expectations that the Federal Reserve will not cut interest rates before June [1] Inflation Data - The personal consumption expenditures (PCE) price index, excluding food and energy, rose by 0.4% in December, following a 0.2% increase in November. Economists had predicted a 0.3% rise [2] - Year-over-year core PCE inflation advanced to 3.0% in December, up from 2.8% in November [2] - The PCE price index increased by 0.4% in December, with year-on-year inflation at 2.9%, compared to 2.8% in November [5] Consumer Spending - Consumer spending, which constitutes over two-thirds of economic activity, rose by 0.4% in December, matching the increase from November. When adjusted for inflation, consumer spending gained 0.1% [6]