Inflation and personal incomes rose in January, according to federal data released Thursday, another sign of economic strength that could delay a long-anticipated interest rate cut.
The personal consumption expenditure (PCE) price index, the Federal Reserve’s preferred measure of inflation, rose 0.3% in January and has risen 2.4% over the past 12 months.
Despite the annual inflation rate falling from 2.6% in the last month of 2023, the monthly inflation rate rose slightly from December, when the PCE index rose 0.1%.
Inflation, which does not include volatile food and energy prices, known as “core” inflation, accelerated to 0.4% in January after rising 0.2% in December. The annual core inflation rate was 2.8% last month, down from 2.9% in December.
The slight rise in inflation was in line with economists’ expectations, following January’s particularly strong jobs report and better-than-expected Consumer Price Index (CPI) inflation data.
However, the 1% increase in personal income in January beat economists’ expectations of a 0.4% increase last month, according to consensus estimates.
Inflation fell sharply from its 40-year high in 2022, but remains significantly above the Fed’s annual target of 2%. A recent spate of positive economic data will likely deter the Fed from cutting interest rates or adding more fuel to the economy.
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