The rate of increase in a key inflation indicator last month was the highest since March 2022.
Known as “super core” inflation, the personal consumption expenditure price index for services—which does not include housing and energy—rose by 0.6 percent in January. In March of 2022, December of 2021, and March of 2021, this inflation gauge increased by this much.
An increase in inflation at this high of a monthly pace is historically unusual. It has only occurred three times this century prior to Biden’s presidency, including one month just after the 9/11 terrorist attacks. The metric has not increased by 0.6 percent since 1993.
High inflation in the services sector is often seen to be less sensitive to monetary policy and more persistent than inflation in the goods sector.
Fed chairman Jerome Powell and other Fed representatives have stated that they closely monitor PCE services, with the exception of housing and energy, as a potential future inflation predictor.
If the monthly growth continued, it would equal an annual rate of 7.4 percent. It has increased by 3.5 percent in the last 12 months.
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