That's not only good news for consumers, but underscores the case that the Federal Reserve could begin cutting interest rates this year.
And it comes at a crucial time: The Fed meets next week to discuss when rates might begin to come down.
The Commerce Department's personal consumption expenditures price index - the Fed's preferred inflation gauge - showed prices in December ticked up a mere 0.2%, in line with economists' expectations.
Prices for all of 2023 increased by 2.6% - that's a significant drop from 2022, when they rose by more than twice that.
The so-called core PCE - which strips out volatile and food and energy prices - rose a modest 2.9% last year, the smallest advance since early 2021.
Cooling inflation has bolstered expectations that the Federal Reserve could start cutting rates as soon as March.
The timing of the first rate cut, however, is uncertain, as the job market and consumer spending remain strong.
Financial markets have pushed the odds of the Fed's first rate cut to later in the Spring in a nod to the economy's continued resilience. The central bank is expected to keep its rates unchanged at its meeting next week.
