A key indicator of US inflation eased again in December, according to government data released Friday, opening the door to smaller interest rate hikes as efforts to cool the economy ripple through sectors.. The Federal Reserve has hiked the benchmark lending rate seven times last year, with an aim to ease demand as inflation surged, while trying to avoid tipping the world's biggest economy into a recession.

A key indicator of US inflation eased again in December, according to government data released Friday, opening the door to smaller interest rate hikes as efforts to cool the economy ripple through sectors.

The Federal Reserve has hiked the benchmark lending rate seven times last year, with an aim to ease demand as inflation surged, while trying to avoid tipping the world's biggest economy into a recession.

And the tightening measures are showing effect, with the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index rising 5.0 percent last month from a year ago, Commerce Department data showed on Friday.

This extends a downward trend since mid-2022, when American households found themselves increasingly squeezed by rising costs.

The central bank focuses on the PCE price index as it reflects actual consumer spending, including shifts to less expensive items, unlike the more well-known consumer price index.

And with the indicator ticking up 0.1 percent from November to December, this could pave the way to a slower pace of rate hikes as...

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