The Federal Reserve’s favourite inflation gauge continues to skyrocket, jumping by the most in almost 40 years as price pressures gain momentum across the US economy.
The personal consumption expenditures price index jumped 0.6% in January, to an annual gain of 6.1%— the sharpest increase since February 1982. Core PCE, which does not account for food and energy prices, rose 0.5% on a monthly basis, and was up 5.2% from January 2021, registering the highest level since April 1983.
The Bureau of Economic Analysis also reported that consumer spending rose quicker than anticipated, increasing 2.1% compared to Dow Jones estimates calling for a 1.6% gain. However, personal incomes remained flat last month, as the expiration of child tax credits offset the 0.5% increase in salaries and wages. Once adjusted for inflation, this caused disposable personal income to drop half a percentage point.
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The latest inflation reading further cements the case for an interest rate increase, with the Fed planing to raise borrowing costs at their upcoming policy meeting in March. However, the ongoing geopolitical crisis between Russia and Ukraine could dampen that economic outlook.
Information for this briefing was found via the BEA and Dow Jones. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
