The Balance Today: News You Need To Know on Dec. 23, 2022

Here’s What the Latest Key Measure of Inflation Says

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Just ahead of the Christmas holiday, the Commerce Department released its latest Personal Consumption Expenditures (PCE) Price Index, an important gauge of inflation. The index rose 0.1% in November, down from October's 0.4% gain, in another sign that inflation is easing. The index was up 5.5% from a year ago, slowing from 6.1% the month before. The core rate, which excludes more volatile food and energy prices, rose 0.2% last month and 4.7% from a year ago, slowing from 5% in October. 

The PCE Price Index is the Federal Reserve’s preferred measure of inflation because it tracks consumers’ purchasing decisions more accurately than the Consumer Price Index (CPI). That’s because the basket of goods and services making up the PCE Price Index is updated more frequently to reflect shifts in consumer preferences.

Consumers have been more optimistic about inflation in recent weeks after the CPI showed the annual rate of inflation declined by more than expected to an annual rate of 7.1% in November. Today’s report supports that trend. With inflation continuing to ease, it raises the chance that the central bank will be more moderate with interest rate hikes at its next meeting at the end of January, though the rate of inflation remains well above the Fed’s 2% target.

Stocks were flat to lower following the release. While there’s no guarantee it will happen, markets could get a nice little boost at the end of the year in what’s known as a “Santa Claus Rally.” There is no definitive explanation for why stocks tend to rise in the days between Christmas and New Year’s, but it could potentially provide a holiday reprieve for investors after a tumultuous year for U.S. equity markets.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Bureau of Economic Analysis. "Personal Income and Outlays, November 2022."

  2. U.S. Bureau of Labor Statistics. "Consumer Price Index Summary."

  3. Board of Governors of the Federal Reserve System. "Federal Open Market Committee, Meeting Calendars, Statements, and Minutes (2017-2022)."

  4. Yahoo Finance. "World Indices."

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