- ORIGINAL NEWS
Key Fed inflation measure rose 0.4% in January as expected, up 2.8% from a year ago
- SUMMARY
Inflation as measured by an index the Fed tracks closely rose in line with expectations in January.
The increase in prices was primarily driven by a rise in services, such as healthcare and housing, while goods prices fell slightly.
Personal income also jumped unexpectedly, but spending dipped.
Despite these mixed signals, the broader trend suggests that inflation is gradually cooling.
The labor market remains tight, with initial jobless claims increasing slightly.
However, this indicates that companies are still hesitant to lay off employees.
The Fed is expected to eventually cut interest rates, but the timing and extent of these cuts are uncertain as inflation remains above its target.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“Inflation rose in line with expectations in January, according to an important gauge the Federal Reserve uses as it deliberates cutting interest rates.”
“The personal consumption expenditures price index excluding food and energy costs increased 0.4% for the month and 2.8% from a year ago, as expected according to the Dow Jones consensus estimates.”
Negative
“Headline PCE, including the volatile food and energy categories, increased 0.3% monthly and 2.4% on a 12-month basis, also as forecast, according to the numbers released Thursday by the Commerce Department’s Bureau of Economic Analysis.”
“While the CPI is used as an input to the PCE, Fed officials focus more on the latter as it adjusts for substitutions consumers make for goods and services as prices fall.”