This latest measure of inflation shows progress toward the Fed’s goal, in a positive sign for consumers

The last inflation snapshot for 2023 revealed that the Federal Reserve’s preferred price gauge didn’t budge last month, holding at 2.6% and wrapping up a year in which price hikes slowed while the economy remained strong.

The last inflation snapshot for 2023 revealed that the Federal Reserve’s preferred price gauge didn’t budge last month, holding at 2.6% and wrapping up a year in which price hikes slowed while the economy remained strong. The Personal Consumption Expenditures price index — the inflation gauge that the Fed uses as its target rate — was up 2.6% annually in December, closing out 2023 with a softer punch than the 5.4% gain a year prior, according to Commerce Department data released Friday. That’s 0.6 percentage points from the central bank’s goal of 2%. Excluding energy and food, components that tend to be more volatile, the closely watched core PCE price index rose 2.9% annually, a slower pace than the 3.2% rate seen in November. The core PCE gauge is at its lowest point since March 2021. On a monthly basis, the headline PCE index rose 0.2%, a slight acceleration from the 0.1% drop seen in November when gas prices were tumbling. The core PCE index also rose by 0.2% from the prior month. Consumer spending finished the year strong and was up 0.7% from November 2023, according to Friday’s report. Adjusting for inflation, spending was up 0.5%.