Inflation in America highest since 2012, PCE index shows
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.
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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