U.S. personal consumption expenditures (PCE), the Federal Reserve's preferred inflation measure, surged 6.4 percent in February over the past year, the Commerce Department reported on Thursday.
PCE rose a tepid 0.2 percent month-on-month in February amid surging inflation, after rebounding an upwardly revised 2.7 percent in January, according to the department's Bureau of Economic Analysis (BEA).
The core PCE, which excludes the volatile food and energy prices, jumped 0.4 percent in February, up 5.4 percent from the same period last year, marking the biggest jump in nearly four decades, the report showed. The index is well above the Federal Reserve's 2 percent target on inflation.
"Consumers are only beginning to feel the crimp of inflation, which will continue to get worse before it gets better," Diane Swonk, chief economist at major accounting firm Grant Thornton said in a blog, noting that spending contracted by 0.4 percent after adjusting for the monthly surge in inflation.
"The Fed is well aware of that and now ready to chill an overheating economy. Bundle up," said Swonk.
The latest data is another reminder that inflation has been persistently high, which could warrant a 0.5-percentage point rate hike at the central bank's May policy meeting, as signaled by some Fed officials.
Federal Reserve Chairman Jerome Powell said last week that the central bank will, if needed, move "more aggressively" to raise federal funds rate by more than 25 basis points at its policy meetings to curb inflation.
"There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability," Powell said.
京公網安備 11010202009201號