Personal income was up 0.2% month-over-month in December, as expected, and personal spending was down 0.2% month-over-month (consensus -0.1%) following a downwardly revised 0.1% decline (from +0.1%) in November. Real personal spending declined 0.3% month-over-month in December.
The PCE Price Index was up 0.1% month-over-month (consensus 0.0%) and the core-PCE Price Index, which excludes food and energy, was up 0.3%, as expected. That left the year-over-year changes at 5.0% and 4.4%, respectively, versus 5.5% and 4.7% in November.
The key takeaway from the report is that it showed a continued moderation of inflation pressures, although the inflation rates are still too high for the Fed’s liking — particularly services inflation which was up 0.5% month-over-month following a 0.3% increase in November — and will keep the Fed in a vigilant, inflation-fighting mode.