MONETARY POLICY REPORT: FEBRUARY 2018 11 pace of hiring and investment by the most innovative firms. Still others argue that there have been important innovations in many fields in recent years, from energy to medicine often underpinned by ongoing advances in information technology, which augurs well for productivity growth going forward. However, those economists note that such productivity gains may appear only slowly as new firms emerge to exploit the new technologies and as incumbent firms invest in new vintages of capital and restructure their businesses Price inflation remains below 2 percent, but the monthly readings picked up toward the end of 2017 7. Change in the price index for personal consumption Consumer price inflation, as measured by the 12-month change in the price index for 12-month percent chang personal consumption expenditures(PCE), remained below the FOMC's longer-run objective of 2 percent during most of 2017. rimmed mean The PCe price index increased 1.7 percent Excluding food and energy over the 12 months ending in december 2017 about the same as in 2016(figure 7). Core nflation, which typically provides a better indication than the headline measure of where overall inflation will be in the future was 1. 5 percent over the 12 months ending in December 2017-0. 4 percentage point lower L⊥1 than it had been one year earlier NOTE: The data extend through December 2017; changes are from one year Both measures of inflation reflected some A SOURCE: For trimmed mean, Federal Reserve Bank of Dallas; for all else, weak readings in the spring and summe of 2017. A portion of those weak readings seemed attributable to idiosyncratic events, such as a steep l-month decline in the price index for wireless telephone services. However the monthly readings on core inflation were somewhat higher during the last few months of 2017, in contrast to the more typical pattern that has prevailed in recent years in which readings around the end of the year have tended to be slightly below average. Moreover the 12-month change in the trimmed mean PCE price index-an alternative indicator of underlying inflation produced by the Federal eserve Bank of Dallas that may be less sensitive to idiosyncratic price movements- was 1.7 percent in December 2017 and has slowed by less than core PCe price inflationMONETARY POLICY REPORT: FEBRUARY 2018 11 pace of hiring and investment by the most innovative firms. Still others argue that there have been important innovations in many fields in recent years, from energy to medicine, often underpinned by ongoing advances in information technology, which augurs well for productivity growth going forward. However, those economists note that such productivity gains may appear only slowly as new firms emerge to exploit the new technologies and as incumbent firms invest in new vintages of capital and restructure their businesses. Price inflation remains below 2 percent, but the monthly readings picked up toward the end of 2017 Consumer price inflation, as measured by the 12-month change in the price index for personal consumption expenditures (PCE), remained below the FOMC’s longer-run objective of 2 percent during most of 2017. The PCE price index increased 1.7 percent over the 12 months ending in December 2017, about the same as in 2016 (figure 7). Core inflation, which typically provides a better indication than the headline measure of where overall inflation will be in the future, was 1.5 percent over the 12 months ending in December 2017—0.4 percentage point lower than it had been one year earlier. Both measures of inflation reflected some weak readings in the spring and summer of 2017. A portion of those weak readings seemed attributable to idiosyncratic events, such as a steep 1-month decline in the price index for wireless telephone services. However, the monthly readings on core inflation were somewhat higher during the last few months of 2017, in contrast to the more typical pattern that has prevailed in recent years in which readings around the end of the year have tended to be slightly below average. Moreover, the 12-month change in the trimmed mean PCE price index—an alternative indicator of underlying inflation produced by the Federal Reserve Bank of Dallas that may be less sensitive to idiosyncratic price movements— was 1.7 percent in December 2017 and has slowed by less than core PCE price inflation Excluding food and energy Trimmed mean + _ 0 .5 1.0 1.5 2.0 2.5 3.0 12-month percent change 2011 2012 2013 2014 2015 2016 2017 7. Change in the price index for personal consumption expenditures Monthly Total NOTE: The data extend through December 2017; changes are from one year earlier. SOURCE: For trimmed mean, Federal Reserve Bank of Dallas; for all else, Bureau of Economic Analysis; all via Haver Analytics