Latest Inflation Barometer Shows Core Prices Up 5.4%, Here’s What The Fed Could Do Next

Latest Inflation Barometer Shows Core Prices Up 5.4%, Here's What The Fed Could Do Next

There’s no doubt that consumer prices are on the rise. But just how much depends on what data you’re referencing. The personal consumption expenditures (PCE) price index—which is the preferred inflation barometer for the Federal Reserve—released Tuesday confirms that prices are growing at the fastest rate in four decades.

The cost of goods and services bought by Americans shows prices were up 6.4% annually in February, according to the Bureau of Economic Analysis. Core inflation, which excludes the more volatile food and energy costs, is up 5.4% year-over-year—the fastest rate of growth since 1983.

“Inflation took a bite out of household incomes and spending in February and will be an even bigger drag in March with surging energy prices in the wake of the Russian invasion of Ukraine,” says PNC chief economist Gus Faucher.

While the PCE jump reflects rising costs in both the goods and services sectors, energy and food prices shifted significantly, 25.7% increase and 8% bump, respectively. Yet the inflation story is about more than just energy, Faucher says. Supply-chain disruptions as well as higher labor and operating costs are also still playing a role, he added.
Source: Fortune
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