The core personal consumption expenditures price index rose 0.6% in January and 4.7% from last year, above economists’ expectations.
A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices.
Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively., with futures tied to the Dow Jones Industrial Average off more than 300 points. All of the numbers suggest inflation accelerated to start the new year, putting the Fed in a position where it likely will continue to raise interest rates. The central bank has pushed benchmark rates up by 4.5 percentage points since March 2022 as inflation hit its highest level in some 41 years.
Policymakers tend to focus more on core inflation as they believe it provides a better long-run view of inflation, though the Fed officially tracks headline PCE.
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