Inflation in the United States picked up again in January and is still far from the Fed’s expectations

THE US inflation rose 0.6% in January which puts a 12-month high at 5.4%, surpassing the figure of 5.3% for the calendar year ending the previous month, according to the Personal Consumption Expenditure Price Index (PCE, for its acronym in Spanish). English), released this Friday by the Department of Commerce.

According to this index (one of the most taken into consideration by the Federal Reserve), in just one month prices rose by 0.6%, above analysts’ expectations.

Moreover, household income increased by 2%the sharpest increase in recent months, while its expenses also followed the same trend, registering an advance of 1.8%.

This Friday’s data is the latest indication that the economy remains in the grip of high inflation despite the Federal Reserve’s strenuous efforts to control it.

Last week, the government released an independent gauge of inflation, the consumer price index, which showed that the the price increase from December to January was 0.5%much more than the 0.1% of the previous month.

In annual terms, consumer prices increased by 6.4% in January. Well below its recent high of 9.1% in June, but still well above the Federal Reserve’s 2% inflation target.

Since March of last year, the Federal Reserve has attacked inflation by raising its official interest rate eight times. Yet despite the resulting rise in the cost of borrowing for individuals and businesses, the labor market remains surprisingly strong.

This is actually a worrying sign for the Federal Reserve, as strong demand for workers tends to drive wage growth and overall inflation. business men it created 517,000 jobs in January and the unemployment rate fell to 3.4%, its lowest level since 1969.

What is PCE

The Federal Reserve is believed to be tracking Friday’s inflation gauge, the Personal Consumption Spending, or PCE, price index, more closely than the better-known CPI.

Generally, the PCE index shows a lower level of inflation than the CPI. Part of this is because rents, which have skyrocketed, carry twice the weight in the CPI than in the PCE.

The PCE Price Index also tries to account for changes in the way people shop as inflation kicks in. Consequentially, can grasp emerging trends; when, for example, consumers move away from more expensive national brands in favor of cheaper brands.

The consumer price index recorded a worrying increase from December to January: it rose by 0.5%, five times more than in November-December.

Similarly, the government’s wholesale inflation index, which shows price increases before they reach consumers, it accelerated by 0.7% from December to Januaryafter falling 0.2% from November to December.

Source: AFP and AP