US inflation indicator jumps more than expected
A key indicator of US inflation rose in January as new home sales jumped more than expected, said government data released on Friday, feeding fears that interest rates could stay high for longer. The numbers, indicating that the world's biggest economy is running hotter than policymakers hope, came despite aggressive efforts by the Federal Reserve to raise the benchmark lending rate and rein in inflation. While sectors like housing slumped recently, some areas of inflation remain sticky, potentially pointing to more rate hikes in the pipeline. The Fed's preferred gauge of inflation, the personal consumption expenditures (PCE) price index, rose 5.4 percent last month from January 2022, while consumption surged more than one percent from a month prior, said the Commerce Department. From December to January, the PCE price index jumped 0.6 percent, the biggest rise since mid-2022 as prices for goods and services both picked up. Excluding the volatile food and energy segments, the PCE price index still bounced 0.6 percent from the preceding month. "Today's report shows we have made progress on inflation, but we have more work to do," said President Joe Biden in a statement. But he added that while there may be setbacks, the US faces "global economic challenges from a position of strength." The central bank focuses on the PCE price index as it reflects actual spending, including shifts to less expensive items, unlike the more well-known consumer price index. While inflation has come off last year's decades-high levels, it remains well above policymakers' two percent target. Personal income rose as well from December to January, said the Commerce Department. Meanwhile, sales of new US homes surged more than expected in January by 7.2 percent to an annual rate of 670,000, seasonally adjusted, the Commerce Department added. This was the highest in nearly a year and up from December's revised rate of 625,000. (AFP)