WASHINGTON – Personal income gained 0.4% and consumption increased 0.7% in December as energy costs increased, but core consumption increased annually by the smallest amount on record, the Commerce Department reported Monday.
Core PCE, which excludes food and energy costs and is the Federal Reserve’s preferred measure of inflation, increased 0.7% from December 2009, a record low increase dating back to 1959. The figure edged down from the previous record low increase of 0.8% set in November. On a monthly basis, core PCE was flat in December.
Energy goods and service prices jumped 4.7% for the month in December.
November’s personal income figure was revised higher to a 0.4% increase from 0.3% reported last month.
Economists expected personal consumption would increase 0.5% and incomes would increase 0.4%, according to the median estimate from Thomson Reuters.
The personal savings rate, as a percentage of disposable personal income, dropped to 5.3%, down from an upwardly revised 5.5% in November. It was the lowest personal savings rate since August 2009.
In 2010, personal consumption increased 3.5%, rebounding from a 1.0% decline in 2009, which was the largest consumption contraction since 1938.
