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US-INFLATION-PERSONAL-INCOME
US inflation index slows sharply in January
WASHINGTON, March 30, 2019 (BSS/AFP) – A key US inflation measure dropped
sharply in January due to plunging energy costs, the Commerce Department
reported Friday.
The cost for energy goods and services fell 6.4 percent at the start of
the year, compared to January 2018, dragging the Federal Reserve’s preferred
inflation index down to 1.4 percent year-over-year, four tenths lower than
the December rate.
That was the lowest annual inflation rate since September 2016.
Even excluding volatile energy and food components, the PCE price index —
based on personal consumption expenditures — slowed to 1.8 percent year-
over-year, once again dropping below the Fed’s 2 percent target.
The price index fell 0.1 percent compared to December, after a 1 percent
jump in the final month of 2018, the report said.
Continued tame price pressures and increasing signs the US economy has
peaked, at a time of slowing global growth, have prompted the Fed to pledge
to hold off on further interest rate increases for the foreseeable future.
And some economists are predicting the central bank will have to cut rates
later this year as growth slows, making the four increases last year look
suspect.
However, the Fed is working with limited data; the recent five-week
government shutdown delayed data collection by government statistics
agencies.
The Commerce Department reported that personal income in February rose 0.2
percent, after a slight decline in January But the agency did not have
information on spending last month and therefore could not provide the
inflation index for February.
Personal consumption spending rebounded slightly in January, rising 0.1
percent or $8.6 billion, after December saw the biggest decline in nearly a
decade.
BSS/AFP/HR/0950