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# Personal Consumption Expenditures Communication: Cost of Living Indicator Closely Observed by the Federal Reserve Increased Pace in the last month of the year
*Circulated: 31st of January, 2025*
*9:49 Eastern Time*
### Main Points
* The Personal Consumption Expenditures (PCE) value indicator, an important indicator of consumer prices, increased by 2.6% on an annual basis in the last month of the year, marginally above November’s 2.4%, in line with market analysts’ predictions.
* Underlying inflation, that omits unstable food and energy costs, was stable in the last month of the year, giving a to some extent optimistic perspective for price increase tendencies in the subsequent months.
* As the Central Bank’s 2% yearly objective is demonstrating more and more unachievable, policymakers are becoming cautious to reduce borrowing rates, maybe keeping borrowing expenses high for multiple kinds of consumer credits.
The BEA made public its monthly release on consumer prices and consumer expenses on Friday, showing that the PCE cost index, a measure of the cost of goods and services, went up by 2.6% year-over-year in the last month of the year, in comparison to 2.4% in the previous month. This value was in line with economists’ forecasts, by surveys from Dow Jones and The Wall Street Journal.
The publication highlights the continuation of consumer prices increases in recent months. The CPI, a different price increase gauge, as well demonstrated a comparable pattern in the last month of the year, with price increases remaining above 2%, stabilizing after the rise seen in the end of 2021 and 2022 at the time of the pandemic.
## Possible Consequence of Price rises on the Central Bank
Continuing price rises have impacted family financial plans, compelling people to spend extra for basic necessities such as groceries, fuel, and accommodation, while at the same time contributing to keeping increased loan expenses.
The increase in the Federal Reserve’s favored price increase indicator in December makes reaching its 2% yearly goal even more problematic.
This seven-day stretch, the Central Bank opted to keep the federal funds rate as it is. This indicates that securing funds will probably continue to be costly for items such as home loans and commercial credits. The Agency’s resolution is mostly attributable to the reality that price increases have not been decreasing as much as they had desired lately.
