Inflation rose to the highest level in four decades in January in the gauge preferred by the Federal Reserve, increasing pressure on the central bank to move quickly to curb price gains.
Prices rose 6.1% in the year ending in January, according to the Personal Consumption Expenditures Price Index updated Friday by the Bureau of Economic Analysis. Inflation is up three-tenths of a percentage point from the month before and at a rate not seen since the end of the era of the Great Inflation in early 1982.
https://www.bloomberg.com/news/articles/2022-02-24/ukraine-is-first-war-waged-amid-operating-nuclear-power-plants?cmpid=BBD022522_MKT&utm_medium=email&utm_source=newsletter&utm_term=220225&utm_campaign=markets&sref=h5EZFUoq The Fed's target for inflation, in comparison, is 2%, as measured by the same index.
The price increases in January were driven in large part by a major rise in the cost of energy — more than a quarter over the course of the year, a phenomenon that has particularly hurt drivers paying more for gas. Food prices, too, rose nearly 7% over the course of the year. So-called core inflation, which strips out the relatively volatile categories of energy and food prices, rose three-tenths of a percentage point to 5.2% in January, the highest since 1983, showing that underlying inflationary pressures were strong.The PCE index is reported in the bureau's report on personal incomes and outlays, which showed strong consumer spending in January.
"Spending is continuing at a solid pace even as consumers are facing ongoing gains in prices," noted Rubeela Farooqi, chief U.S. economist for High Frequency Economics.The surging inflation has led investors to expect that the Fed will increase its interest rate target, set to zero during the pandemic in an effort to prevent a bigger collapse in spending, rapidly in the months ahead.
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