Please ensure Javascript is enabled for purposes of website accessibility
A Key Inflation Gauge Tracked by the Fed Slowed in February
gvw_ap_news
By Associated Press
Published 1 year ago on
March 31, 2023

Share

Getting your Trinity Audio player ready...

The Federal Reserve’s favored inflation gauge slowed sharply last month, an encouraging sign in the Fed’s yearlong effort to cool price pressures through steadily higher interest rates.

Friday’s report from the Commerce Department showed that consumer prices rose 0.3% from January to February, down from a 0.6% increase from December to January. Measured year-over-year, prices rose 5%, slower than the 5.3% annual increase in January.

The report also showed that consumer spending rose 0.2% from January to February, a drop from a month earlier but an indication that households are still providing fuel for economic growth.

Taken as a whole, Friday’s figures show that inflation pressures, though easing gradually, still maintain a grip on the economy. The Fed has raised its benchmark rate nine times since March of last year in a strenuous drive to tame inflation, which hit a four-decade high in mid-2022.

Even after having slowed, consumer prices are still posting year-over-year increases well above the Fed’s 2% target. Earlier this month, the Labor Department said its consumer price index rose 0.4% from January to February and 6% from February 2022.

The Fed’s policymaking has been complicated by the tumult that erupted in the financial system after the collapse this month of Silicon Valley Bank and New York-based Signature — the second- and third-biggest bank failures in U.S. history. The central bank now must consider the risk that its continuing efforts to cool inflation through ever-higher interest rates could further destabilize the banking system.

At a news conference last week, Fed Chair Jerome Powell acknowledged that the uncertainties now overhanging small and midsize banks will likely cause tighter lending conditions. If banks do restrict lending in the coming months, Powell noted, it would probably slow the economy and perhaps act as the equivalent of a quarter-point Fed rate hike.

The Fed is thought to monitor the inflation gauge that was issued Friday, called the personal consumption expenditures (PCE) price index, even more closely than it does the government’s better-known consumer price index. Typically, the PCE index shows a lower inflation level than CPI. In part, that’s because rents, which have been among the biggest drivers of inflation, carry twice the weight in the CPI that they do in the PCE.

The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture emerging trends — when, for example, consumers shift away from pricey national brands in favor of less expensive store brands.

RELATED TOPICS:

DON'T MISS

Lauryn Hill, Tyla and More Will Perform at the 2024 BET Awards. Here’s What to Know About the Show

DON'T MISS

From Globe Trotting to Globe Tripping: Why Psychedelic Vacations Are on Trend

DON'T MISS

Find Out Which Lobbying Groups Get Their Way Most Often in the California Legislature

DON'T MISS

Here’s Why Ukraine Should Seek Peace

DON'T MISS

Fresno County Gets National Recognition for Poverello House Project

DON'T MISS

You Don’t Think Corn Dogs Are Haute Cuisine? These Chefs, Using Alligator Sausage, Beg to Differ.

DON'T MISS

Investigators Have Name & Face for Suspected Arsonist Who Left Notes at Fresno Homes

DON'T MISS

Gavin Newsom and Top Democrats Are Deciding California’s Budget Behind Closed Doors

DON'T MISS

Fresno State Is 1 of Carnegie Foundation’s 25 Leadership for Public Purpose Colleges

DON'T MISS

As the Flag Drops at Le Mans, Remembering the 3 Americans Who Won in 1978

UP NEXT

Supreme Court Rules California Man Can’t Trademark ‘Trump Too Small’

UP NEXT

US Inflation Eases in May, Indicating Potential Relief from Price Pressures

UP NEXT

Rep. Costa Blasts GOP House For Holding AG Merrick Garland in Contempt

UP NEXT

Is California’s $20 Minimum Wage to Blame for Loss of 10,000 Fast-Food Jobs?

UP NEXT

Wall Street Surges as Bitcoin and Gold Rise Following Unexpected Slowdown in Inflation

UP NEXT

AP Sources: 8 Individuals Possibly Linked to Islamic State Arrested in US

UP NEXT

US Gas Prices Are Falling. Experts Point to Mild Demand at the Pump Ahead of Summer Travel

UP NEXT

Justice Alito Questions Possibility of Political Compromise in Secret Recording

UP NEXT

Blinken Calls on Hamas to Accept Gaza Cease-Fire Plan After UN Security Council Strongly Endorses It

UP NEXT

Trump Urges Anti-Abortion Group to Defend ‘Innocent Life’

Here’s Why Ukraine Should Seek Peace

9 hours ago

Fresno County Gets National Recognition for Poverello House Project

9 hours ago

You Don’t Think Corn Dogs Are Haute Cuisine? These Chefs, Using Alligator Sausage, Beg to Differ.

9 hours ago

Investigators Have Name & Face for Suspected Arsonist Who Left Notes at Fresno Homes

20 hours ago

Gavin Newsom and Top Democrats Are Deciding California’s Budget Behind Closed Doors

22 hours ago

Fresno State Is 1 of Carnegie Foundation’s 25 Leadership for Public Purpose Colleges

22 hours ago

As the Flag Drops at Le Mans, Remembering the 3 Americans Who Won in 1978

22 hours ago

Paw-sitively Spikey: The Rise of a Supermutt!

1 day ago

Supreme Court Deals Blow to Environmental Law Relied on by Housing Opponents

1 day ago

The Latest | Hezbollah Says Its Intensified Attacks Show Israel That All-out War Would Be Costly

1 day ago

Lauryn Hill, Tyla and More Will Perform at the 2024 BET Awards. Here’s What to Know About the Show

NEW YORK — The 2024 BET Awards are fast approaching. Last year’s show celebrated 50 years of hip-hop with tributes to the genre’s earl...

7 hours ago

7 hours ago

Lauryn Hill, Tyla and More Will Perform at the 2024 BET Awards. Here’s What to Know About the Show

8 hours ago

From Globe Trotting to Globe Tripping: Why Psychedelic Vacations Are on Trend

9 hours ago

Find Out Which Lobbying Groups Get Their Way Most Often in the California Legislature

9 hours ago

Here’s Why Ukraine Should Seek Peace

9 hours ago

Fresno County Gets National Recognition for Poverello House Project

9 hours ago

You Don’t Think Corn Dogs Are Haute Cuisine? These Chefs, Using Alligator Sausage, Beg to Differ.

20 hours ago

Investigators Have Name & Face for Suspected Arsonist Who Left Notes at Fresno Homes

22 hours ago

Gavin Newsom and Top Democrats Are Deciding California’s Budget Behind Closed Doors

MENU

CONNECT WITH US

Search

Send this to a friend