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U.S. consumer spending increased in December

Staff Writer |
U.S. consumer spending accelerated in December as households bought motor vehicles and cold weather boosted demand for utilities amid a rise in wages.

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Consumer spending increased 3.8 percent in 2016 after a 3.5 percent rise in 2015. With domestic demand firming, inflation showed some signs of picking up last month.

The personal consumption expenditures (PCE) price index rose 0.2 percent after edging up 0.1 percent in November.

In the 12 months through December the PCE price index advanced 1.6 percent, the biggest increase since September 2014. That followed a 1.4 percent increase in November.

Excluding food and energy, the so-called core PCE price index ticked up 0.1 percent after being unchanged in November.

The core PCE price index increased 1.7 percent on a year-on-year basis after a similar gain in November.

The core PCE is the Fed's preferred inflation measure and is running below its 2 percent target.

However, other inflation measures are above the PCE price indexes. The consumer price index (CPI) is currently at 2.1 percent on a year-on-year basis and the core CPI is up 2.2 percent.

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