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Key US inflation measure hits fastest pace since 2012
[WASHINGTON] A closely watched measure of US inflation in January hit its fastest monthly pace in nearly four years, the Commerce Department reported Wednesday.
The data also showed that the Personal Consumption Expenditures price index, the US Federal Reserve's preferred measure of inflation, grew at an annual rate of 1.9 per cent, a hair's breadth below the Fed's 2 per cent target.
That increase likely will boost expectations the Fed could raise interest rates this month rather than waiting until later in the year.
The central bank held its fire for most of 2016 but Fed Chair Janet Yellen testified last month that rate hikes were coming and possibly soon.
The Commerce Department data showed that while personal income grew 0.4 per cent in the month, with disposable income up 0.3 per cent, this was not enough to keep pace with inflation.
The PCE price index, which tracks the value of goods and services purchased by the public, jumped 0.4 per cent in January, the largest increase since February 2013 when the index rose by the same amount, and a jump from the 1.6 per cent posted in December. A larger increase has not been recorded since 2009.
The core PCE price index, which excludes the more volatile categories of food and fuel, gained 0.3 per cent for the month. The increase was a tenth of a point faster economists expected.
Year-over-year, however, core PCE was flat at 1.7 per cent compared to January 2016.