BREAKING: A measure of prices closely tracked by the Federal Reserve rose 5.8% last year, the sharpest increase since 1982. Brisk consumer spending collided with snarled supply chains to raise the costs of food, furniture, appliances and other goods.
Speaking at a news conference Wednesday, Powell acknowledged that inflation has gotten “slightly worse” in the past month. He cautioned that higher prices “have now spread to a broader range of goods and services,” after initially affecting sectors of the economy, like factory-made products for homes, that were most disrupted by the pandemic.
The inflation figure that the government reported Friday is its personal consumption expenditures index. Though the consumer price index is a better-known barometer, the Fed tends to track the PCE in setting its interest rate policies. The PCE index tracks actual purchases consumers make each month, while the CPI follows a fixed market basket of goods., also the fastest pace in nearly four decades.
At the same time, bottlenecked supply chains and shortages of components, notably semiconductors, have left many retailers and auto dealers with fewer cars and other goods to sell. Powell has blamed mainly ongoing “supply and demand imbalances” for driving inflation.at a healthy pace, higher costs for food and paper products and the need to raise pay to attract and keep workers eroded profits even after it had raised prices 6% last year.
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