By Christopher Rugaber, The Associated Press on January 26, 2024.
WASHINGTON (AP) – The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a trend sure to be welcomed at the White House as President Joe Biden seeks re-election in a race that could pivot on his economic stewardship.
Friday’s government report showed that prices rose just 0.2% from November to December, a pace broadly consistent with pre-pandemic levels and barely above the Fed’s 2% annual target. Compared with a year ago, prices increased 2.6%, the same as in the previous month.
Excluding volatile food and energy costs, prices also rose just 0.2% from month to month. And compared with a year earlier, so-called “core” prices climbed 2.9% in December – the smallest such increase since March 2021. Economists consider core prices a better gauge of the likely path of inflation.
Friday’s mild inflation data arrived a day after government figures showed that the economy expanded at a surprisingly strong 3.3% annual pace in the final three months of last year. Solid consumer spending propelled the growth, capping a year that had begun with widespread expectations of a recession. Instead, the economy grew 2.5% in 2023, up from 1.9% in 2022.
Biden’s Republican critics have sought to highlight what had been the biggest inflation spike in 40 years, for which they have largely blamed the president’s spending policies. But with inflation having dropped sharply after an extended period of gloomy consumer sentiment, Americans are starting to show signs of feeling better about the economy. A measure of consumer confidence by the University of Michigan, for example, has jumped in the past two months by the most since 1991.