A key measure of inflation showed that prices increased at their highest level in last 39 years, but it didn’t discouraged consumers from spending heavily, according to the Commerce Department report.
The core Personal Consumption Expenditures (PCE) price index, the central bank’s primary inflation gauge, increased 5.2% in its highest annual gain since April 1983. It surpassed the 5.1% estimate of Dow Jones.
Headline PCE, including energy and food prices was up by 6.1%, recording the highest gain since Feb 1982.
On a monthly basis, core PCE price index increased 0.5% and the headline PCE increased by 0.6%.
The commerce department report also showed that consumer spending increased faster than anticipated.
Paul Ashworth, chief U.S. economist at Capital Economics wrote, “Overall, the real economy appears to be in stronger health than we feared, suggesting that the Fed will push on with its planned rate hikes starting in March, although the Ukraine conflict makes a 50-basis point hike less likely.”