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America   A government report

Inflation in America highest since 2012, PCE index shows

America inflationThe higher cost of goods such as gasoline pushed U.S. inflation in January to the highest level since 2012.

A government report that tracks consumer spending showed a modest increase of 0.2% last month, with incomes rising even faster at 0.4%. Economists polled by MarketWatch has forecast a 0.4% gain in spending.

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Yet an inflation index known as PCE also jumped 0.4% in January, pushing the increase over the last 12 months to 1.9% from 1.6% at the end of 2016.

That matches the highest year-over-year level since October 2012.

The PCE index is the preferred tool for the Federal Reserve to measure inflation.

The rate of inflation is now close to the Fed’s 2% long-term target, and if it keeps moving higher, the central bank could raise interest rates more aggressively.

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