Inflation held steady at a 2.6% annual rate in December, as measured by the gauge favored by the Federal Reserve.

The new personal consumption expenditures price index numbers reported Friday morning by the Bureau of Economic Analysis don’t show prices falling last month, and so may be a bit of a disappointment for the Fed, which is working to lower inflation by keeping interest rates elevated.

Still, there are some bright spots. Core PCE inflation, a measure of inflation that strips out volatile energy and food prices, fell 0.3 percentage points to a 2.9% year-over-year rate. That is slightly better than what economists were expecting

Despite price growth declining over the past year, overall inflation is still running above the Fed’s goal of 2% annual price growth.

On a monthly basis, prices rose 0.2 percentage points in December. Prices had declined slightly in November.

Other recent inflation reports for last month showed increases.

The consumer price index indicated that inflation ticked up to 3.4% for the year ending in December 2023, up from 3.1% the month before and hotter than economists had predicted.

Additionally, the producer price index, which gauges wholesale inflation, rose to 1% from 0.8% the month before.

Still, the Fed is now eying a pivot. The central bank has held interest rates where they are since July, but now appears on the verge of cutting rates, with the first cut expected as soon as the first quarter.

Fed officials, while stressing that they could still raise rates even more if inflation proves too sticky, have penciled in three rate cuts next year, although investors think there will be up to six downward revisions.

Outside of inflation, other parts of the economy have proven solid despite over a year of higher interest rates.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Gross domestic product grew at a 3.3% annual rate in the fourth quarter of 2023, adjusted for inflation, the Commerce Department reported Thursday, bringing growth for the year to 2.5% in 2023.

The economy added another 216,000 jobs in December, and the unemployment rate was at 3.7%, a low level, historically speaking.