Inflation jumps in early 2023, PCE shows, and stays stubbornly high
The numbers: The cost of U.S. goods and services jumped 0.6% in January — the biggest increase since last summer — in another sign that stubbornly high inflation is likely to take awhile to return to low pre-pandemic levels.The rate of inflation,... The numbers: The cost of U.S. goods and services jumped 0.6% in January — the biggest increase since last summer — in another sign that stubbornly high inflation is likely to take awhile to return to low pre-pandemic levels.
Key details: The more closely followed core index also rose 0.6% last month. Analysts has forecast a 0.5% gain.Formally known as the personal consumption expenditures price index, PCE is viewed by the Fed as the best predictor of future inflation trends. The central bank pays especially close attention to the core gauge that strips out volatile food and energy costs.
They might substitute cheaper goods such as chicken thighs for more expensive ones like boneless breasts to keep costs down. Or buy generic medicines instead of brand names.Big picture: The Fed is raising interest rates to try to tame inflation and return it to precrisis levels of 2% or less. Yet higher rates also slow the economy and raise the risk of recession.
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