Skip to content
Home » News » Consumer prices rise, stoking more economic concern

Consumer prices rise, stoking more economic concern

  • / Updated:
  • Staff Report 

Consumer prices in the U.S. rose at their fastest pace since June last month, according to a report from the Commerce Department released on Friday. The inflation gauge preferred by the Federal Reserve showed that prices rose by 0.6% from December to January, up sharply from a 0.2% increase the previous month. On a year-over-year basis, prices rose by 5.4%, up from 5.3% in December.

Core inflation, which excludes volatile food and energy prices, also rose by 0.6% from December, up from a 0.4% increase in November. Compared to a year earlier, core inflation was up by 4.7% in January, compared to a 4.6% increase in December.

The report revealed that consumer spending rose by 1.8% last month from December after falling the previous month. The figures exceeded forecasters’ expectations and indicated that inflation was not slowing as much as had been hoped, with the Federal Reserve potentially continuing to raise interest rates.

Since March 2021, the Fed has raised its key interest rate eight times in an effort to curb inflation. Despite this, the job market remains strong, with 517,000 jobs added in January and an unemployment rate of 3.4%, the lowest since 1969. However, the strong demand for workers could lead to wage growth and overall inflation.

The Fed is believed to monitor the personal consumption expenditures price index closely, which typically shows a lower inflation level than the consumer price index. The PCE index seeks to account for changes in consumer shopping habits when inflation rises and is expected to capture emerging trends more effectively.

The report follows recent data that suggested the economy remains affected by inflation despite efforts by the Fed to reduce it. The government’s separate inflation measure, the consumer price index, showed that prices rose 0.5% from December to January, with consumer prices up by 6.4% year over year, well above the Fed’s 2% inflation target. The government’s wholesale inflation measure, which shows price increases before they affect consumers, increased by 0.7% from December to January, after having dropped by 0.2% from November to December.

Categories: News