Fed’s favorite inflation gauge rose 0.3% in January

An inflation measure closely watched by the Federal Reserve rose again in January as high prices continued to weigh on millions of Americans.

The personal consumption expenditures (PCE) index showed that consumer prices rose 0.3% from the previous month, according to the Labor Department. On an annual basis, prices climbed 2.4% – down slightly from the 2.6% reading recorded the previous month.

The figures were both in line with estimates from Refintiv economists.

In a sign the Fed’s fight against inflation is slowly making progress, core prices – which strip out the more volatile measurements of food and energy – climbed 0.4% from the previous month and 2.8% from the previous year. It marked the best reading for core inflation since February 2021.

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While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation. Both the core and headline numbers point to inflation that is slowly returning to the Fed’s preferred 2% target.

This is a developing story. Please check back for updates.