Feb. 25 (UPI) -- Core personal consumption expenditures, a key inflation indicator for the Fed, rose 5.2% in January from the year before, indicating continued concern over rising prices, a new report from the Commerce Department said Friday.
The increase in the PCE index, minus food and energy, was the fastest prices have grown in the past 39 years. The index including food and energy, grew 2.1% in January and 6.1% over the past year.
The report said personal income increased by less than 0.1% while disposable personal income rose 0.1%.
"The estimate for January personal income and outlays reflected the continued economic recovery and government response to the COVID-19 pandemic," the report said. "In January, COVID-19 cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country.
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"Government social benefits decreased, primarily reflecting the end of advance Child Tax Credit payments authorized to be paid out through December by the American Rescue Plan Act of 2021."
The reports said goods price increases were spread out, led by motor vehicles and parts, "other" nondurable goods, and recreational goods and vehicles. The largest price increases in the service index included those connected with housing and utility spending.
"Overall, the real economy appears to be in stronger health than we feared, suggesting that the Fed will push on with its planned rate hikes starting in March, although the Ukraine conflict makes a 50 [basispoint] hike less likely," Paul Ashworth, chief U.S. economist at Capital Economics, said, according to CNBC.
