Inflation eases, US economy shows resilience

The latest inflation report of 2023 brings positive news for Americans and the Federal Reserve as the Commerce Department data reveals a potential end to the sharp price increases.

The data released on Friday shows the Fed’s preferred price gauge holds steady at a 2.6% annual rate, while a key measurement of underlying inflation dropped to its lowest since March 2021.

Despite the challenging period, American households closed out 2023 on a strong note, with substantial increases in incomes and wages compared to the previous year.

Consumers continued to spend generously, supporting economic growth and dispelling recession concerns.

Heading toward price stability
The Personal Consumption Expenditures (PCE) price index, the Fed’s target rate, rose 2.6% annually in December—a softer increase than the previous year’s 5.4%.

Economists express optimism about the economy’s trajectory, with inflation heading towards the Fed target rate of 2%.