FOX Business’ Kelly O’Grady provides analysis of the U.S.’s inflation data as the Federal Reserve continues to grapple with a smooth economic recovery.
An inflation measure closely watched by the Federal Reserve rose again in January as high prices continued to weigh on millions of Americans.
The personal consumption expenditures (PCE) index showed that consumer prices rose 0.3% from the previous month, according to the Labor Department. On an annual basis, prices climbed 2.4% – down slightly from the 2.6% reading recorded the previous month.
The figures were both in line with estimates from Refintiv economists.
In a sign the Fed’s fight against inflation is slowly making progress, core prices – which strip out the more volatile measurements of food and energy – climbed 0.4% from the previous month and 2.8% from the previous year. It marked the best reading for core inflation since February 2021.
AMERICANS ARE YANKING MONEY OUT OF THEIR RETIREMENT SAVINGS TO COVER BILLS
Customers shop at a supermarket in Foster City, California, on Sept. 13, 2023. (Li Jianguo/Xinhua via Getty Images / Getty Images)
While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation. Both the core and headline numbers point to inflation that is slowly returning to the Fed’s preferred 2% target.
Other figures included in the report showed that consumer spending rose just 0.2% in January compared with a 0.7% increase in December, suggesting that Americans are pumping the brakes on spending after the pivotal holiday season.
Many economists anticipate that spending will slow further in the coming months as consumers continue to grapple with expensive goods, high interest rates and the resumption of federal student loan payments.
This is a developing story. Please check back for updates.
