A key inflation measure rose last month at the fastest pace since March 2022.
The personal consumption expenditure price index for services excluding housing and energy services (often referred to as “supercore” inflation) rose 0.6% in January. This inflation gauge rose this much in March 2022, December 2021, and March 2021.
It is historically unusual for this inflation indicator to rise at such a monthly pace. Before Biden took office, such a situation had only happened three times this century, including in the month immediately after the 9/11 terrorist attacks. Prior to that, the indicator had not increased by 0.6% since 1993.
High inflation in the service sector is generally considered to be more persistent and less responsive to monetary policy than goods inflation.
Federal Reserve Chairman Jerome Powell and other Fed officials said they are watching PCE services, excluding housing and energy, as an indicator of where inflation may head in the future.
If sustained, this monthly gain would equate to an annualized return of 7.4%. It has risen 3.5% over the past 12 months.
