The Federal Reserve’s favorite inflation measure showed intensifying price pressures in February, rising to its highest annual level since 1983, the Commerce Department reported Thursday. Excluding food and energy prices, the personal consumption expenditures price index increased 5.4% from the same period in 2021, the biggest jump going back to April 1983. Including gas and groceries, the headline PCE measure…
While the employment picture has tightened, it is inflation that has captured much of the attention as price increases continue.
The Fed has reacted to rapidly surging inflation by tightening policy, with an interest rate increase in March expected to be followed by hikes at each of the remaining six meetings this year. Goods prices climbed by 1.1% for the month, the fastest increase since October 2021, pressured by supply chain backups that have bedeviled the economy for much of the pandemic era. Those problems were expected to be"transitory," a description the Fed had to abandon when it finally capitulated on the loosest monetary policy in its history.
However, the price increases flipped in February from longer-lasting goods to shorter-term purchases. Inflation for durables was flat, while non-durable prices rose 1.8%.However, energy prices jumped 3.7% for the month — abating in March — while food inflation rose 0.4%, down slightly from a month ago.
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