WASHINGTON — Personal consumption expenditures rose 0.7% in December as higher energy prices spurred spending, the Commerce Department reported Monday.
Prices for energy goods and services jumped 4.7%.
Core PCE, which excludes food and energy costs and is the Federal Reserve’s preferred measure of inflation, was unchanged from December and up only 0.7% on a year-over-year. That’s the smallest annual increase since record-keeping began in 1959. On a monthly basis, core PCE was flat in December.
Economists expected PCE to increase 0.5% , according to the median estimate from Thomson Reuters.
“This report is good news since it indicates that consumers are making a comeback and they are feeling slightly less precautionary,” said Chris Christopher, an economist at IHS Global Insight. “The main worries that consumers have are on housing values and gasoline prices. Energy prices increased a whopping 8.2% compared to December 2009 and have been over or at 4.0% [on a year-over-year basis] since the summer.