Inflation in the United States, a major subject of the electoral campaign, remained stable in December year-on-year, but the rise in prices excluding food and energy fell to the lowest since March 2021.
The price increase remained 2.6% in December, compared to December 2022, according to the PCE index, a gauge favored by the American central bank (Fed), published Friday by the Commerce Department.
Over one month, however, inflation started to rise again, with prices increasing by 0.2% compared to November, as expected, while they had fallen by 0.1% between October and November.
But excluding food and energy, so-called “core” inflation fell to 2.9%, its lowest level in almost three years.
“Inflation is now under control,” US Treasury Secretary Janet Yellen said on Thursday.
Americans “see their financial situation improving,” she added, estimating that “if inflation remains low, they will begin to regain confidence in the economy. »
Joe Biden’s administration knows that rising prices will be a key element in the November presidential election. And that former President Donald Trump, who is well positioned to be the Republican candidate, regularly accuses Democrats of pursuing an inflationary policy.
“How (the) undecided voters perceive inflation, among other economic developments, will likely determine the election,” explains Bernard Yaros, economist for Oxford Economics, in a note.
Furthermore, household incomes increased a little slower in December than in November, at 0.3% compared to 0.4%, the Commerce Department said.
But their spending increased more quickly, driven by end-of-year holiday purchases, to 0.7% compared to 0.4%.
“Middle of the year”
PCE inflation is particularly watched by the American central bank (Fed), which wants to reduce it to 2% over one year.
The central bank will hold its monetary policy meeting (FOMC) on Tuesday and Wednesday, during which it is not expected to touch interest rates, which have been in the range of 5.25 to 5.50% since July.
The Fed now plans to cut rates.
It could start “by the middle of the year”, estimates Rubeela Farooqi, chief economist for HFE, and “an earlier start cannot be ruled out if inflation reaches the target by the end of the first quarter or the beginning of the second trimester.
Inflation that finally decides to return to its 2% objective would allow households to regain purchasing power and have easier access to credit.
Those responsible for the monetary policy institution indicated in mid-December, during their last meeting, that they were considering several cuts in 2024.
The president of the San Francisco regional branch, Mary Daly, who will have rotating voting rights within the Fed’s monetary policy committee in 2024, however judged it “really premature to think” that the start of the decline in rate “is imminent”.
The day before, Raphael Bostic, president of the Atlanta Fed, also voting this year, had shown himself open to the start of normalization “before the third quarter”, if “the evidence (is) convincing”.
Another measure, the CPI index, on which pensions are indexed in the United States, started to rise again in December, to 3.4% over one year, after several months of decline, due in particular to the price of housing.
The American economy has defied predictions of recession in 2023, with GDP growth even accelerating compared to 2022, to 2.5% compared to 1.9%.
Growth in the fourth quarter alone was much stronger than expected, at 3.3% at an annualized rate – a measure favored by the United States, which compares GDP to that of the previous quarter then projects the evolution over the whole year at this rate.